In the wake of their partnership announcement with the CK Birla Group, we sat down with Mr. Emmanuel Delay, Executive VP, India & Pacific, PSA Group, to learn more about PSA’s plans for the Indian market.
Could you tell us about your plans for India and when we’re likely to see Peugeot cars on the road in India?
The plan is quite clear. The first step in our strategy was to establish a partnership with the CK Birla Group. This partnership will allow us to manufacture powertrains in India, as well as assemble vehicles. We also intend to start engineering work in India, following which we will develop two-to-three models that will be sold in India. The first launch would take place in 2020-2021.
Will you start with a top-down approach in terms of your product strategy?
We haven’t decided yet. As I mentioned, our first priority was to establish a partnership with someone we can trust. I’m sorry I can’t give you too much information on this, as it’s not finalized yet – we are still at the very early stages of designing new vehicles. But, yes, we will not start with a small A-segment car.
Even though your outlook towards the global market is quite aggressive, such as acquiring Opel & Vauxhall, and bidding for Proton, you outlook for India is quite cautious. Why is that?
Yes, our outlook towards the Indian market is cautious – as we know that the Indian market is very challenging and demanding. It’s very important for us to get it right. We know of our past, and we know that we haven’t always done things in the proper way. We also have examples of our competitors who are struggling in the market. So we know that the key to success is to go slowly. Based on how things go, we will invest further – as opposed to making a big-bang entrance and building a huge facility. We know it will take time to ramp up and for us to establish a network. We don’t ever want to be in a position where we look at our profit and loss account, and see that we’re losing money. We want to be in India for the long run, and we think the key is to do it step-by-step.
But you’re very clear in your mind that you will develop an India specific model by 2020?
There will be a number of vehicles that will suit the market. This doesn’t mean that they will be unique and specific to India, but they will be a good fit for the market. The Indian client has specific expectations, and we know that we have to get it right.
And will it be called the Ambassador? What do you plan to do with this iconic Indian brand?
Well, one dimension is to take things in a step-by-step manner. The other dimension is to create a full ecosystem in a relatively rapid period of time. So, even though we’re going slowly, we’re looking at all the dimensions of what it takes to be successful. Therefore, we’re looking at not just manufacturing and sourcing, but also engineering. And ultimately our aspiration is to be ‘Indian in India.’ Of course, at the same time, we’re humble so that’s not an official claim – but we feel that the name Ambassador could be part of this journey. And, as you know, it was also part of our partner’s journey. So, to us, it feels good that we may be able to use this name at some point in future too.
Are you worried about the baggage that either brand – Peugeot or Ambassador – brings with it in the Indian market?
We want to study the market to really understand where our brand stands – and not just Peugeot, but, as you know, we also have Citroen. But we’re not worried about the name Ambassador having different connotations in the market, and we will decide in future how we can leverage the name.
What strengths do your partners bring to the table in India?
They know the market very well, and they have know-how – especially in manufacturing. We believe they are very strong in terms of cost competitiveness. They are also business oriented, down to earth, pragmatic and fast in making decisions. And they have a history of collaborating with western and foreign companies – a good track record – and we see that as a big plus. We see that together we would be stronger than if we would be on our own. So we feel very good about this collaboration.
Is it an area of concern that you’re making a return to India after shutting shop in 1997?
We are conscious of it, and we hope that we can overcome that first bad step by showing our new way of looking at India. For us, it’s part of our unfortunate heritage, but we want to overcome that. Companies evolve and change, and hopefully we’ve turned the corner on that.
Would you look at creating a sub-brand that would be specific for India or the South East Asian market?
The key for us is that the vehicles need to be attractive. We don’t think of low cost as being something that we want to pursue. At this point in time, we don’t feel the need to create a new brand that may not be compatible with the DNA of our other brands. Our idea is that we should be proud of the cars that come to India.
Could India play a bigger role in the Asia-Pacific market?
We always look at these opportunities, but ideally we want a plan that stands on its feet with India only. If there are opportunities to export, we will look at them. But our job is to ensure that if our plan were to be India only, it would still work.
Do you see any of your existing architectures as being suitable for the Indian market?
We don’t think our architecture is incompatible, but we realise that adaptation is needed to meet the preferences of the local market – including the types of materials or even the grades of steel. But we already have cost competitive solutions, especially in the areas of powertrains where we have very low fuel consumption ratings.
There are various sub-segments in the Indian market – such as the sub four-metre sedan or even crossovers that are called SUVs. What areas interest you more?
We will look at the established segments, as well as those that are the fastest growing. We also know that if we bring 2-3 models then at least one of them will have to look like an SUV. Beyond that it’s too early to say. But, let’s say, if we want to limit ourselves to 4 bodies to begin with, then the sub four-metre sedan will probably not make it – because, as you say, it’s very specific to the Indian market, and, let’s be honest, it’s not the nicest looking either. As a result, these models are also not the easiest to export.