Kia, Peugeot, Citroen and others to shelve their Indian plans

author image CarTrade Editorial Team
Monday 18 March 2013, 11:45 AM

A number of international car makers like PSA Citroen, Proton, Kia, Geely, and Chery are likely to postpone their plans to mark their presence in the Indian auto market. Instead, these companies are planning to foray in other developing markets of the world like China and Brazil. Citroen, the France-based auto maker, was earlier all set to establish a manufacturing unit in Sanand, worth Rs. 4,500 crore project, but has now removed the country from its latest worldwide deployment chart of its coming production units. Reportedly, the company is now looking ahead to set up plants in Kaluga (Russia) and Buenos Aires (Argentina).

Other well established auto maker’s like Malaysia's Proton, Chinese company’s like Geely and Chery, French Peugeot and Korean brand Kia are also planning to revive their future plans for the Indian auto market. The reason cited for this move was the lack of models, which can compete against the likes of these auto makers in this price sensitive car market. Another reason for this is the reducing sales in their primary respective auto markets, which have impacted their financial positions. On this, the Managing Director of Consulting Firm Frost and Sullivan, VG Ramakrishnan was quoted as saying, “The Indian car market is getting competitive with too many brands, and getting a reasonable market share will be tough for any new entrant.”

Earlier, Citroen planned to introduce a mid-sized sedan in the Indian auto market somewhere in 2014, but has closed its office in Mumbai of late. On the other hand, Peugeot, which said in early 2011 that it will soon mark presence in the country again after over a decade has also put its plan on hold, owing to its not-so-good financial position. Reportedly, the auto maker was also impacted by bad sales in its primary markets. Proton, which had discussions with domestic auto maker Hero Group for a partnership, is also witnessing unfavourable times in its primary auto markets. Expressing his views on the same, the former Director of Proton, BVR Subbu said, “India was very much on the radar, but it came after China and Iran.”

Launch of models from Chery and Geely in the Indian auto space was also on the cards; however lack of diesel powered vehicles in their product portfolio slowed the move. Sources close to the development process of these companies, said, “With the Chinese car market being predominantly of petrol and automatic vehicles, it has made it even more difficult to bring in suitable products for India.” Interestingly, Cherry happens to be a joint venture company with Jaguar Land Rover, which might make its route in the country through JLR. However, none of the company officials entertained comments on the same.

The small car segment in the Indian auto sector accounts for almost 60 per cent of sales, wherein 25 to 30 per cent models are driven by diesel. The Executive Director at Geely Automobile Holdings, Lawrence Ang said that the auto maker has not finalised any set time to foray in India. “Geely has always been interested to explore opportunities in India and has been working on the plan. So far we do not have a definite timetable yet," he added.

Coming to the view of Kia Motors, which is a completely owned by Hyundai, the auto maker did not find the Indian car market enough lucrative. It must be noted that Kia Motors has been positioned below the Hyundai in a number of auto markets. Reportedly, Kia Motors is unable to look for the right product, which will be offered to the Indian audience. A source close to the process said, “This made the entry point for Kia higher than Hyundai, and also there was a possibility of cannibalisation of Hyundai sales.”

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