Industry Trend Analysis - PSA Return An Upside Risk To Car Production Outlook - MAR 2017

BMI View : PSA Group ' s plan to manufacture vehicles in India will present an upside risk to our passenger car production forecast over the 2017-2021 period. This investment will be supported by an upbeat outlook for the Indian passenger car segment which will create a supportive market for the company's domestically produced vehicles.

In January 2017, it was reported that French carmaker PSA Group is set to announce its return to the Indian market through a manufacturing venture with New Delhi-based CK Birla Group with this investment forming part of the company's 'Push to Pass' growth plan. According to French newspaper Les Echos, the maker of Peugeot and Citroen cars has signed a joint venture deal with the family-owned conglomerate to build cars at Birla Group's Hindustan Motors factory in Chennai. The factory currently builds Mitsubishi cars and has annual production capacity of 12,000 vehicles.

We believe that by partnering with a local player in India's automotive industry and thereby getting a better understanding of the Indian consumer and their car preferences, PSA will be well placed to make a successful return to the domestic market. PSA has been absent from the Indian market since the late 1990s, with the company previously having announced plans to re-enter India in 2011 with a new 170,000-capacity plant. However, financial woes forced the company to drop the plan in late 2012.

PSA Return To Boost Production Outlook
India - Passenger Car Production, Units
e/f = BMI estimate/forecast. Source: BMI, OICA

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