PSA looks to grow supplier base in India, vendors have global opportunity

The PSA Group, through the Citroen brand, yesterday officially announced its entry into the India market. The French carmaker, which is targeting 2 percent of the Indian passenger vehicle market by 2024, today held a India Suppliers Summit which drew over 500 automotive component vendors, both Tier 1 and Tier 2 suppliers. It is learnt that PSA has already chosen 150 Indian suppliers. 

For the Indian supplier fraternity, business from the PSA Group, which is implementing its Push to Pass strategy to increase its sales outside Europe by 50 percent, presents a huge opportunity.

Supplier selection and retention in the PSA Groupe global supplier base are guided by corporate and social responsibility. Importantly, the selected suppliers will have access to all of the PSA Group business opportunities worldwide, which totaled a humungous 42 billion euros (Rs 324,702 crore) in 2018. 

PSA sourced 250m euros worth of components from India in 2018
Last year, PSA Group sourced made-in-India components worth 250 million euros (Rs 1,911 crore). When asked if 5 years is a realistic timeline for the sourcing figure to touch a billion euros (Rs 7,644 crore),  Michelle Wen, executive VP (Global Sourcing & Supplier Quality), Groupe PSA, said she would like it to happen much earlier. 

Export of made-in-India Citroens will play a big role for the PSA Group to achieve economies of scale to justify localisation of over 90 percent from the start of production. This will involve a very high 98 percent localisation for the vehicle and 90 percent for the C5 Aircross engine.

What will help the company achieve this high level of localisation is PSA’s two joint ventures in Tamil Nadu with the CK Birla Group for vehicle assembly at Thiruvallur, and a powertrain plant with AVTEC, which was inaugurated on November 22, 2018. 

PSA Group records fifth straight year of growth 
The PSA Group will launch 116 new cars across its five brands – Peugeot, Citroen, DS, Vauxhall and Opel – by 2021, accelerate the electrification of its model range and launch Peugeot in the North American market as part of the second phase of its ‘Push to Pass’ growth plan.

The strategic plan, the first version of which was unveiled in 2016, is designed to turn the company into a “global vehicle manufacturer”, and the company completed the first phase by recording its fifth consecutive year of growth. Since the first plan was launched, PSA has acquired Vauxhall and Opel – which posted a profit in 2018 for the first time in 20 years.

The second phase of the plan runs from 2019 until 2021, and aims to grow the company’s global presence with entry into several new markets including India, along with expanding its product range and a focus on electrification and digital technology.

L-R: Ms Michelle Wen, EVP, Global Purchasing and Supplier Quality, Groupe PSA and Guillaume Ruffino, Vehicle Program Purchasing vice-president at Groupe PSA.

Michelle Wen, executive vice-president, Global Purchasing and Supplier Quality, Groupe PSA; Emmanuel Delay, executive VP and Head of India-Pacific, Groupe PSA and Gillies Le Borgne, senior vice-president, Engineering & Quality, Groupe PSA, presented the group strategy not only for India but also for global programs, including electric and hybrid vehicles at the Supplier Summit.

PSA looks for quality, cost & delivery performance as well as TCO
Michelle Wen, executive vice-president, Global Purchasing and Supplier Quality, Groupe PSA, said: “In a context of fierce competition, purchasing has a key role to play in terms of performance for projects and serial life production phases. We are looking for ‘QCD’ (Quality, Cost & Delivery) performance, not only the lowest cost per part, but also TCO (Total Cost of Ownership). The Monosokuri approach, gathering engineering, manufacturing and purchasing will make the difference towards competitors, and our sourcing with Indian suppliers will lead to newer verticals and opportunities to meet customer needs and respond to the technological shift. This summit also focuses on developing and integrating a broad network of Indian suppliers through encouraging collaborative product development, orchestrating and connecting information across the supply chain, and understanding an ecosystem of suppliers and partners within it.”

The ethical, environmental and social criteria are crucial for the selection of a new supplier, that are regularly assessed by a third party. This assessment covers the following topics: environment, labour practices, fair business practices, and sustainable procurement. This assessment is used for the risk identification and for the selection of sites to be audited. Each supplier assessed receives a score card covering all relevant aspects of the evaluation.

(Inputs from Sumantra B Barooah)

Also read: PSA Group and Avtec inaugurate new powertrain plant in Hosur

PSA growth plan includes range expansion, new markets