Peugeot to adopt Volkswagen strategy for India entry

Peugeot to adopt Volkswagen strategy for India entry

Last Updated: Tue, Aug 30, 2011 04:12 hrs

Peugeot Citroen is treading the line which Volkswagen, the continent’s largest car producer, had adopted to make its long-awaited debut in the Indian market.

The French company, which is the only large automaker not present in India, is aiming to position a premium sedan which will compete with Volkswagen’s Passat before gradually shifting to lower segments. It will, in fact, be a re-entry for Peugeot, which had exited the country more than a decade ago after it suffered consistent losses.

Peugeot is gunning for the launch of the Peugeot 508 premium sedan in India before the end of 2012. The car will be priced in the range of Rs 20-25 lakh. Apart from the Passat, the 508 will have to compete for space against Honda Accord, Toyota Camry, Nissan Teana and the Superb from SkodaAuto.

Although volumes in this premium segment are on the lower side, which is about 1,900 units a year, Peugeot is trying to position itself as a premium brand in India before moving onto the volume generating compact hatchback segment.

“The company is looking at a top-down strategy for India. After its exit from the country nearly 15 years ago, the company is cautious on its re-entry. Globally, the brand competes with Volkswagen and its other brand and for India, it will not be different,” said an industry source. The company is in the process of setting up its manufacturing facility in the country but has not finalised the location.

Volkswagen, too, had marked an India entry with the launch of the Passat in 2007 before moving onto other models, both in upper and lower ends. After positioning its brand at the premium end, the German major finally launched the Polo (a compact car) in 2010, its cheapest car yet.

Recently, France’s second-largest car maker, Renault, adopted a similar strategy, making a re-entry with the launch of the Fluence premium sedan, in an attempt to shed its image as a manufacturer of the no-frills Logan sedan.

Peugeot is also aiming for a launch in the premium hatchback segment in India, which is also the fastest growing segment in the country. According to sources, the company is looking to enter the segment where models such as Maruti Suzuki Swift, Ritz, Nissan Micra, VW Polo and Hyundai i20 are already present.

The French automaker is considering its hatchbacks like Peugeot 107, 206 and 207, being sold in European markets. Additionally, similar compact car models under the Citroen brand such as C1 are also being considered for India. A detailed questionnaire sent to Peugeot remained unanswered.

The company was engaged in a detailed study of the India automotive market and had conducted talks with several states for a full-fledged manufacturing facility. An announcement to this effect was expected to be made in the first months of this year.

Announcement relating to Peugeot’s official entry was thought to be one of the prime disclosures that was supposed to be made during French President Nicolas Sarkozy’s visit to India in December last year. However, failure in signing agreements for acquiring land for the proposed facility led to the last minute pull back, added sources. Tamil Nadu, Andhra Pradesh, Gujarat and Maharashtra were the states who had held talks with the French company. Sources said Peugeot is now looking at unveiling at least some of its models at the Delhi Auto Expo.

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