Peugeot may partner with GM to make cars in India

The French car maker Peugeot made a big splash at the 2012 Auto Expo. The company announced huge investments of around Rs. 4500 crore’s to make cars in India. The company even selected Sanand to be the destination for the new plant and the cars would start rolling from 2014.

However the winds soon changed with the French maker putting all investments in India on hold. As per some reports the Gujarat government trying to bring back Peugeot to Gujarat.

With Peugeot Citroen pulling the plug on a roughly 4,500 crore project to make cars out of Sanand in Gujarat, the Narendra Modi-headed government is pulling out all stops to keep the French auto giant back in the state.

One option being pursued: get Peugeot Citroen’s partner globally, General Motors (GM), to keep its India plans alive and make Peugeot cars out of its factory in Halol, some 200 km off Sanand.

“The company has informed the state industries department that it is exploring a joint venture with GM, which operates its biggest India facility in Halol,” said a senior state government official. A Peugeot Citroen official based in India confirmed the development: “We are in talks with GM for a tie-up.” But a spokesperson for the automaker in France refused to make any comment on the matter.

In end-February, GM and PSA Peugeot announced a global alliance in which the Detroit carmaker will buy a 7% stake in Europe’s second largest auto company. This makes GM the second largest shareholder after the Peugeot family.

“The GM and PSA Peugeot Citroen alliance is an important partnership for GM that will have a positive effect on our company worldwide, particularly in Europe. We expect it to have long-term benefits globally, however it’s too soon to say how it will impact India and the Asia Pacific region,” said P Balendran, VP, GM India.

In February 2011, Peugeot had said it was re-entering India, after over a decade. However, a grim financial situation precipitated by falling sales in its home market has compelled Peugeot to review its India plans.The French automaker had zeroed in on Sanand to produce 170,000 vehicles per annum. According to the proposed plan, the first car, a mid-size sedan, was to roll out in 2014.