I doubt their re-entry. They will take atleast 5 years to build one plant and one year from now to take decision where to build one plant. They will have to establish new sales and service network which is not a small task.
About their products, well they dont have proper petrol motors, the reason why they are in JV with BMW and with Fiat for diesel motors. The last good heard engine was the 1586cc 110 bhp diesel. It is still available. What will they come up with. With their detuning technique + heavy weight of cars, the FE will go down as engines wont perform optimally. If they tune it for FE, performance will go below par.
Their cars are good to drive even today and from what I have read, they dart into corner with certain amount of enthusiasm. Chassis are really sorted out. Safety is top notch with most of the offerings doing 5/5 in EuroNCAP. But its other areas where they will not succeed.
1) Strong motors. Look at Altis, G3HC as example for petrol engines and Fiat SDE for diesel.
2) A.S & S. Show me one European that is good for A.S & S. The Indian customer will not be able to trust any European manufacturer fast and this is Peugeot with a bad experience in India.
3) Pricing. Under the pretext of quality, they cannot charge more. Also they have habit of pricing the car higher and calling it premium car. Common with europeans. Essentially differently badged Peugoets will be avialable at higher cost as Citroens.
A lot of issues and a lot of money required.
All their hatchbacks are heavyweights so FE, a must for small car in India will have to watched out for.
For their sedans, they must come up with 407 at Rs. 10 lakh with a good 2.0 ltr diesel to sustain. If they start with this, they will find some success.
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