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Global carmakers shelve India plans

by ET Posted on 18 Mar 20139,901 Views Comments

Tough financial conditions force Proton, Peugeot, Citroen, Kia to shelve their India plans


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A fleet of carmakers such as Proton, PSA Citroen, Kia, Geely, and Chery seems to have shelved their plans to drive into India, and has instead reset destination to other emerging markets such as China and Brazil. French carmaker Citroen, which had zeroed in on Sanand in Gujarat as the location for a Rs 4,500-crore project, for example, has officially removed India from its latest international deployment chart of its future manufacturing plants that included Buenos Aires in Argentina and Kaluga in Russia.


Others such as French carmaker Peugeot, Malaysia's Proton, Korean brand Kia and Chinese firms Geely and Chery, too, are reviewing their India plans due to lack of vehicles that can compete in the price-sensitive Indian car market, or because falling sales in primary markets have hit their financials.


"The Indian car market is getting competitive with too many brands, and getting a reasonable market share will be tough for any new entrant," said VG Ramakrishnan, MD of consulting firm Frost and Sullivan.


Citroen, which planned to roll out a mid-sized sedan in the country in 2014, shut down its office in Mumbai recently. An email query sent to PSA Citroen days ago was not replied to till Sunday evening.


Peugeot, which in February 2011 said it was re-entering India after more than a decade, put the plan on hold last year due to the grim financial situation following falling sales. "The group is currently evaluating the scheduling of the project," a company spokesperson had told ET in 2012.


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