What Went Wrong For Peugeot In India?
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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