What Went Wrong For Peugeot In India?

by Faisal Ali Khan

Published: April 29th, 2012

Peugeot might be one of the biggest car makers in Europe, but it has absolutely no presence in the Indian market. With the Indian car market growing bigger day by day, there is no big automaker which doesn’t have the presence in the sub-continent. The most recent car maker to set up operations in India is Porsche, which used to import vehicles through a third party. So why doesn’t Peugeot have a presence in India?

In 1994, Peugeot tied up with Premier Automobiles. Premier is an Indian automaker which manufacturers cars under license, their latest offering being the Zotye Rio, which is a re-badged Daihatsu Terios. Peugeot offered the 309 sedan in the 90s, which failed to excite Indians. Sales were very poor and the dealership network was small. Soon, Peugeot started to run into labour trouble and during my meeting with Peugeot India officials at the 2012 Auto Expo, they told me they had to leave everything and run back to France. The unsatisfied workmen were coming to kill the Peugeot management! Peugeot left and went missing from the Indian market for a decade.

They made a return last year and soon all over Pune – a city near Mumbai, where the Automobile Research Association of India [ARAI] is present, the Peugeot 207 hatchback was seen undergoing tests to obtain governmental approval. Peugeot announced plans of setting up an Indian facility and procured land in Gujarat. The development of the plant commenced and at the 2012 Auto Expo, the French automaker showcased a range of cars including the 508 sedan, RCZ, Le Mans racer, etc. Peugeot was soon going to be back with a bang.

But as soon as the Expo finished, rumors of offices being closed began to trickle in. Peugeot management clarified that after the Euro crisis, they are slowing down their Indian operations. Peugeot later tied up with GM, and now the French automaker is saying they plan to use GM’s India facility to produce vehicles. Peugeot is scrapping its 650 million euro investment in India. The company says that GM is a global partner and they will use their plants to assemble vehicles. GM denies the same, saying that they have absolutely no plans to assemble cars for Peugeot in India. The problem with GM is that their Indian operations rely heavily on SAIC (GM’s Chinese partner) and by assembling cars for Peugeot, their partnership with them could be jeopardized.

So what went wrong for Peugeot India?

Wrong entry strategy in 1994, with the wrong partner.
The second coming was too late.
Brand building never took place. Peugeot could have setup a small network and brought in completely built units from France to create an aspirational brand.
Not committing investments for the Indian market.
Wrong products offered to Indians. The Peugeot 309 was highly dated when it was launched in India.

If you were part of the Peugeot management, what would you do?

Faisal Ali Khan is the owner/operator of MotorBeam.com, a website covering the auto industry of India.

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5 of 11 comments

MrWhopee on Apr 29, 2012

Peugeots seem to do poorly outside its main market in Europe. It barely existed in Indonesia too, despite having been here for a long time (my father owned a Peugeot in 1970s) and never left. They're represented by one of the biggest car importers too. And they have quite a few models. But their last success was Peugeot 206 decades ago. BTW, I saw a Peugeot RCZ coupe-convertible in a mall parking lot last night. I wonder how many are those in the country?

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- Lorenzo on Apr 29, 2012
  
  Funny, I had a neighbor from Indonesia, whose family moved to California in 1965. The neighbor's father worked for a Dutch company, and in 1963 bought a 1960 Valiant from a co-worker, who had just bought a Peugeot 403 wagon. Within six months, the co-worker wanted to buy back the reliable Valiant, and my neighbor's father ended up giving him the car when the family moved in '65. The 403 apparently broke down nearly every time the co-worker drove it, and my neighbor's father had to get him to work in the Valiant every time.
  
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- Kuman on Apr 30, 2012
  
  i saw a white one with 19inch wheels around central jakarta. They shouldnt have problem moving these cars if they priced it less and market it more aggressively. the 207 sedan was a flop IMHO. they should immediately brought in the 208 1.2L with 90 something HP... with the upcoming fuel price hike, it should be interesting. they do lots of blunder in pricing and marketing these products, but it might be because internal competition between Astra BMW and other Astra product... Peugeot is too damn overpriced for indonesia.
  
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- MrWhopee on Apr 30, 2012
  
  @Lorenzo Now that's a rare thing, a 403 wagon. I don't think I've ever seen one, in Indonesia or anywhere. My father's 504 seem to be pretty reliable... Then again it's a simple, conventional automobile with few things to break. I think it's the later Peugeots that developed a reputation for unreliability.
  
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Onyxtape on Apr 30, 2012

My uncle, who lives in the Pacific NW, was a certified Francophile and loved his Alain Delon movies. So he buys at Peugeot 505 in the mid 80s. I was too young to know whether it rode or drove nice or not, but I did like the styling. He had the foresight to actually buy two of the same model (his and hers) so he had access to spare parts, as Peugeot by that time was selling better in Africa than in the US.

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