PSA Groupe and CK Birla have agreed a joint-venture to produce and sell vehicles and components in the Indian State of Tamil Nadu by 2020.
Initial investment will see EUR100m (US$107m) ploughed into the site for vehicle and powertrain manufacturing as part of two joint ventures.
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As part of the first agreement, PSA Groupe will hold a majority stake in the joint-venture company being set-up with HMFCL for the assembly and distribution of PSA passenger cars in India. With the second, a 50:50 joint-venture is being set-up between PSA and AVTEC for manufacture and supply of powertrains.
Manufacturing sites for both vehicle assembly and powertrains will be based in the state of Tamil Nadu.
Initial manufacturing capacity will be around 100,000 vehicles per year and will be followed by incremental investment to support a ramp-up of the long-term project. Manufacturing capacity for powertrains will cater to domestic market needs and global OEMs.
The operation will be supported by an as-yet unspecified level of localisation, to reach necessary cost competitiveness.
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By GlobalDataThe partnership will allow both companies to participate in the growth of the Indian automotive market, which is expected to reach 8m to 10m cars by 2025 from 3m last year.
“Benefiting from the strong support of our Indian partner, the CK Birla Group and a shared vision, this project is consistent with the strong execution of our Push to Pass strategic plan and represents a major step in PSA Group’s worldwide profitable growth in key automotive markets,” said PSA Groupe chairman, Carlos Tavares.
For his part, CK Birla Group chairman, CK Birla, added: “We have embraced ‘Make in India for India and the World’ for several decades and are among the early adopters of frugal manufacturing in the country.”
Data from just-auto’s QUBE service shows PSA’s Push to Pass strategy encompasses:
. Grow revenue by 10% by 2018 and 15% by 2021
. Launch one new car every year for each of the three brands, with 26 new models in total, including seven plug-in hybrids and four EVs; also included will be a one-tonne pick-up probably sourced from a third-party
. Achieve this with what the company calls “frugal” R&D expenditure
. Maintain rigorous control over production and fixed costs
. Generate an average annual automotive operating margin of 4% between 2016 and 2018, and 6% by 2021
. Return to North America within ten years, first with vehicle-sharing technologies and later with an EV made for the Bollore brand; the major brands will return at a later date.
