Official! PSA Group (Peugeot) signs JV with CK Birla Group

PSA Group, owner of automotive brands such as Peugeot and Citroen, has officially entered into an agreement with the CK Birla Group, owner of Hindustan Motors. Under this agreement, the two companies will produce and sell vehicles and automotive components in India by 2020.

The agreement is claimed to be a long term partnership between the two conglomerates. An initial investment of close to €100 million (Rs. 700 crore) will be used for setting up vehicle and powertrain manufacturing plants in the state of Tamil Nadu.

Two joint-venture agreements have been signed between the PSA Group and the CK Birla Group. Under the first agreement, the PSA Group will hold a majority stake in the JV company, which will be formed with HMFCL (Hindustan Motors Financial Corporation Limited). This company will be responsible for the assembly and distribution of PSA passenger cars in India. The second agreement, a 50:50 joint-venture between the PSA Group and AVTEC Ltd, will manufacture and supply powertrains for PSA vehicles. AVTEC Ltd. is a subsidiary of the CK Birla Group and manufactures powertrains and precision engineering products.

Manufacturing sites for vehicle assembly as well as powertrain production will be based in Tamil Nadu. Initially, the company will be setting up plants with an annual capacity of 1,00,000 units. The PSA Group will also be aiming at significant levels of localization for its products in order to ensure competitive price tags.