So it’s a top-down approach for Peugeot in India, starting with the 508. But, like any other manufacturer, you can’t avoid the hatchback. What are your plans on that front?
We said we will have a top-down approach and at the Auto Expo, we displayed cars to show this. The RCZ is a hatchback but can be considered a luxury car in India. The 3008 is a hatchback, but can be considered as a luxury car in India as well. With these two cars, and if we re-valuate depending on the feedback we will have on these models, we are in the hatchback segment, with imported cars. The 508 is a saloon. My first point is that we should not mix segments. You can be entry level or luxury or premium, with the hatchback or saloon. But style is not defining the segmentation. When we spoke about a top-down approach, we wanted to say we would start, although volumes would be limited and the cars imported. What is important is that these cars showcase our technology and support the brand building of Peugeot in India. This is also consistent with the strategy we follow worldwide to present more premium products than what we were used to. Then, obviously, we will go to the segmentation and the 508 will be locally assembled, and will not be priced like the RCZ. The market is evolving and we want to be ready to adapt ourselves to this evolution.
Did you display the RCZ and the 3008 to get prospective customer feedback?
By displaying these cars, we aim to get real feedback from potential customers, from professionals that will enable us to better assess their potential with minor adaptations or if they have no future at all here. So at the press conference, we said categorically that they are representative of the brand but that’s not exactly the range we’d have because we want to be flexible. For example, we understand that ground clearance is the key focus for India; a car like the RCZ cannot have very high ground clearance. Does that make the car unacceptable to the Indian market or, on the contrary, because of its success worldwide and its sporty looks, does the car go to a segment of customers who are not in the majority but can feel its design, sportiness and for whom style is important? That is what we want to understand.
A hatchback can also be a very premium product. Are you saying that perhaps a saloon can be an entry level model in Peugeot’s portfolio?
You have markets where some saloons are considered entry level. Then, this is not the situation in India where if you look at the cars which are usually launched to enter the market from a customer point of view, you find more hatchbacks. This is understandable because of India’s regulations which tax cars that are longer than four metres much more, and for technical reasons, a hatchback is easier to design within the four-metre constraint than a saloon.
So because of these India-specific regulations, do you have to design an all-new hatchback or change specifications of your models, like a 207 for example?
Firstly, the 207 is over four metres long. By definition, this car is not compatible with the regulations here. Obviously, the car has been designed to meet European regulations. What we have to do in India is to be ready to meet the demands of customers here. We cannot say that just because something is good in Europe, you need to take the same. So we are not going to market the 207 in India and don’t plan any adaptation of the 207 either for India.
Does this mean it will be an all-new model?
It will be, if you take the 508 today. The 508 has been marketed successfully, so I cannot say that we will have only brand-new models but we have to keep the same spirit for a market like India. We also need products which are presented to the market and are distributed across the world more or less at the same time.
Can you give us an update on the entry model which is under development in Spain?
I know about the M3 project because previously, I was in charge of this programme. What I can say is that the start of production at the Vigo plant is planned for end-2012. But at the same time, there is no right-hand-drive (RHD) car today in the M3 programme. So if you’re expecting cars from Vigo to arrive in India, I am sorry I have to disappoint you.
An adaptation of a RHD perhaps?
From the beginning, the M3 project at Vigo has been designed for production in that plant and sale for countries around the Mediterranean. So that is the target for the project at Vigo.
The M3 and M4, is it the hatchback and saloon version or are they two different projects?
They are two different projects belonging to two different brands of the group. While M3 is a Peugeot product, the M4 is a Citroën project.
When you start full local production in India, you will look at very competitive positioning, not diluting Peugeot’s premium positioning but in terms of cost. So vendor development is key. What kind of a base do you have so far?
At present, it is fair to say that we don’t have a comprehensive vendor base because if you go to Sanand, you will have the Tata Nano plant. I see around 20-and-odd suppliers there. That is the situation today and it hasn’t changed since September 1, 2010. On the contrary, what is true is that with Tata and Ford and Peugeot setting base here, this area is very logically called in India a new cluster. When you have a cluster, you have vendors coming there and negotiating with the Gujarat government. We are happy that vendors are considering coming close to these three car manufacturers because that is advantageous for us. Having said that, Bosch has already announced that it is coming.
When will you select your vendors?
Today, what is important for us is to know how best to design a car which is cost effective in Europe, in Latin America and other regions. That isn’t our situation in India. We are looking at our specifications as a standard and what is compatible with the materials/processes we find in India in order to be cost effective. That is taking some time. We will then select vendors. Having said that, there is no guarantee that being in the cluster should create efficiencies in logistics or cost savings because you ship your products to the plant from Pune or Chennai. You would have higher logistics costs.
Will you also look at exports?
Today, we are not yet in India. So if we go to India, it is first to meet the demand of Indian customers. We go to India because it is a strategic market, due to the growth expected in the coming decade. Then obviously, if we make RHD cars in RHD markets, which is the norm in the region, there are opportunities for export.
Globally, the auto sector is seeing consolidation and partnerships. Would you look at some type of an alliance with an Indian OEM?
At the Delhi Auto Expo, you had Bajaj Auto display a new entry-level vehicle for India. In the past, a French carmaker had had talks with them but, apparently, things did not work out. A French carmaker also reached an alliance with Mahindra and I have understood that it wasn’t successful. If you go to other elements, Seat had some partnership with Tata. From the analysis I receive, I don’t believe this is a very successful story. We must have the humility to learn from the good and bad experiences of the others. So if your question is, do we have talks going on at present, yes that’s true. We have partnerships with Seat on LCVs, a partnership with Mitsubishi, BMW and Ford on engines, and Toyota for their very small cars. Do we plan to have the same kind of partnership in India with a local OEM, the answer is no. We don’t plan to have for this project a partnership with another car manufacturer in India.
I was at the Geneva Show where the Aygo, badged differently for Peugeot, was displayed. Is that a possible contender for India, maybe as a derivative?
The Aygo, which is a Toyota product, and the 107, which is a Peugeot, are both made at the Toyota-Peugeot JV in the Czech Republic. Its dimension is around 3.6 metres long, which is similar to some very successful cars in India. But that is not the right product for commence our operations. Why? When we launched the 107 and Toyota, the Aygo, Peugeot had, in Europe, a long history, the brand was well known, its strength established. But that is not our situation in India. We need an approach in which where start with products from a technology standpoint. When we present the 3008, it is not only because it is a crossover, or successful but because of the technology behind the product, with the possibility of it being hybrid and 4x4. It is the first car globally to be a diesel hybrid and indicates that we are mastering technology, which is important for the local market. Being able to master diesel technology in India is key.
Can the 107 be a second or third model in that segment?
We have displayed two potential CBUs, and the 508. If the RCZ or 3008 are good products for India, we should bet on them. If not, we have to find, based on feedback and analysis, other more suitable cars. But you can’t start with some CBUs and only one car. If you want to display technology, you can’t do it with just one car. So if you talk about two, three or even four models, I don’t believe that in our top-down strategy, there is room for a competitor to the i10 or a car of a similar size of the 107. If in 15 to 20 years' time, we see that all our competitors have at least one car or more in that segment, we can consider it. We will, perhaps, have to look at what others are doing, but today, I don’t believe it is the priority. You have in India a market that is big enough for higher segmentations that we need to address before.