Industry Trend Analysis - PSA's Return Lifting Car Production Forecast - MAR 2017


BMI View : Following PSA Group's announcement that it will return to the Indian market by 2020, we are revising up our passenger car production forecast to annual average growth of 8.0% over our 2020-2021 forecast period, up from a previously forecasted growth of 7.6%.

On January 25, French carmaker PSA Group released further details on its plan to re-enter the Indian autos market through a joint venture (JV) agreement with New Delhi-based CK Birla Group to produce and sell vehicles and components by 2020. PSA will invest EUR100mn (USD107mn) to build cars in the Indian state of Tamil Nadu under a partnership agreement with Birla-owned Hindustan Motor Finance Corporation Limited (HMFCL), with an annual production capacity of 100,000 vehicles. The French automaker has stated that it will begin by producing 10,000-15,000 vehicles annually, raising output gradually to an expected 100,000 vehicles depending on market demand.

A second deal with AVTEC, another CK Birla company, will build engines and transmissions for PSA and potentially for other manufacturers, the groups announced in a joint statement. We previously highlighted the positive impact that PSA's return to the Indian market will have on our passenger car production outlook ( see 'PSA Return An Upside Risk To Car Production Outlook', January 24), but after the company released further details of its plans we have revised up our forecasts over the latter part of our 2017-2021 forecast period. We now forecast passenger car production to average annual growth of 8.0% over our 2020-2021 forecast period, up from a previously forecasted growth of 7.6%.

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

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