Peugeot, the French auto maker and a subsidiary of PSA Peugeot Citroen, has put its plans on hold to re-enter the Indian auto market as of now. The reason cited for this move states that the car maker is presently mulling to concentrate on its European activities, wherein it has been operating as the second largest auto maker of the region. A fall in the European auto market has probably acted as a barrier for Peugeot to re-enter the Indian auto space and expand its overseas operations.
Reportedly, Peugeot is counted among the worst hit auto maker’s in the European crisis. It must be noted that the company has a large stake in Europe and major portion of its sales were driving from this region. Therefore it is fairly clear that why the French auto maker could not employ the massive investment of Rs. 4000 crore, which was planned for the Indian auto market. Reportedly, the Indian manufacturing unit of Peugeot was supposed to roll out 1,65,000 units per annum. This unit was anticipated to not just fulfil the demand of domestic market but the auto maker was also looking ahead to export few models in Asian countries. Source close to the development process earlier said that the company is planning to produce its much acclaimed 508 sedan at the proposed plant.
However, the auto company has postponed all its Indian plans for present and also skipped the last date of payment, according to the State Support Agreement (SSA). By doing so, it has failed to procure the piece of land, which was allocated for setting up the plant. Reportedly, Peugeot has already lost 200 acres of land and as the validity of SSA has expired, it cannot even claim the remaining piece of land. Sources close to the development process stated that the inability of Peugeot to employ Rs. 4,000 crore investments has appeared to be a setback for the flourishing auto space of Gujarat as the plant would have generated a significant number of indirect and direct employment.