Two days after Autocar Professional revealed that France’s PSA Group and India’s CK Birla Group were to ink a joint venture for manufacture and sale of vehicles, official confirmation of the same has arrived.
The two corporates have signed joint-venture agreements to produce and sell vehicles and components in India by 2020. The India project, which is in line with the PSA Group’s strategic ‘Push to Pass’ growth plan and the growth plan of the CK Birla Group in the automotive sector, will see an initial investment of close to 100 million euros (Rs 764 crore) for vehicle and powertrain manufacturing in Tamil Nadu.
PSA Group's plan to re-enter India was first reported by Autocar Professional on June 20, 2015.
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The partnership entails two joint-venture agreements between the PSA Group and the CK Birla Group companies. As part of the first agreement, the PSA Group will hold a majority stake in the joint-venture company being set up with Hindustan Motors Finance Corporation Ltd (HMFCL) for the assembly and distribution of PSA passenger cars in India.
As per the second agreement, a 50:50 joint venture is being set up between the PSA Group and Avtec Ltd for manufacture and supply of powertrains. The manufacturing sites for both vehicle assembly and powertrains will be based in the state of Tamil Nadu.
The initial manufacturing capacity will be set at about 100,000 vehicles per year and will be followed by incremental investment to support a progressive ramp-up of the long-term project. The manufacturing capacity for powertrains will cater to the domestic market needs and global OEMs. The performance of the industrial set-up will be supported by a significant level of localisation, in order to reach the necessary cost competitiveness.
This long-term partnership will allow both companies to participate in the growth of the Indian automotive market, which is expected to reach 8 to 10 million cars by 2025 from the three million units in 2016.
Commenting on the two agreements, Carlos Tavares, chairman of the Managing Board of PSA Group, said: "Benefitting from the strong support of our Indian partner, the CK Birla Group, and a shared vision, this project is consistent with the strong execution of our ‘Push to Pass’ strategic plan and represents a major step in PSA Group's worldwide profitable growth in key automotive markets.”"
He also tweeted, "A meaningful presence in India is part of our Push to Pass plan."
CK Birla, chairman, CK Birla Group, commented: “I am confident that the coming together of the latest state-of-the-art technology from the PSA Group and the engineering and manufacturing excellence of the CK Birla Group will benefit the automotive sector in India.””
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