PSA Confirms Return to Production in India

PSA Group confirms it will begin building cars in India by 2020 through a partnership with New Delhi-based CK Birla Group. The plan was reported on Monday by Les Echos.

The French carmaker will invest about €100 million ($107 million) to establish kit assembly of cars and powertrains in the state of Tamil Nadu. The partners will build the vehicles at a Hindustan Motors factory in Chennai that current makes SUVs for Mitsubishi Motors Corp. Birla launched Hindustan Motors 75 years ago.

PSA will own a majority stake in a venture with Birla’s HMFCL unit to make and distribute PSA models in India. A separate 50:50 venture with Birla’s AVTEC Ltd. unit will produce powertrains for the vehicles and eventually could supply other carmakers.

PSA says it has not yet decided which brands and models will be produced by the Indian venture. The company last assembled cars in India through a partnership with India’s Premier Automobiles, which ended in 1997.

The Birla ventures intend to create capacity to make 100,000 cars per year, according to PSA CEO Carlos Tavares. But he says initial output will be between 10,000 and 15,000 units.