Did Peugeot miss out on a big success in India?

Earlier in September 2011, the Peugeot, the biggest French car manufacturer, signed contract with the Gujarat government to set up its car plant in Sanand. With a lucrative investment plan of 4500 Crores, the company wants to commence it plant with an initial capacity of 1.7 lakh units with an upgrade plan for 3.4 lakh units in the future.

As a part of the deal, the company had shifted its headquarters to Ahmedabad with an aim to roll out their first car in the beginning of 2014. The plant spread across 584 acres in the region was estimated to employ 5,000 people. But in early 2012, Plagued then by the Euro Crisis and falling sales back home during the year 2012 forced the company to give up the land and scrap the SSA.

Almost all major car manufactures are in India now. This market is still dominated by Japanese and Korean players. India is a quite dynamic and price sensitive market.

India is a third largest car market in Asia with 8.6% share in 2013. ACG forecast it would be 15% by 2020. Premium, Budget and Luxury segment will be major growth segments. Market drivers are favourable for Peugeot. Still a lot of potential could be explored by the PSA Group. The object which is at least 50% sale will be done outside Europe can be achieved soon by entering into Indian market considering the Group is already successful in the Chinese marketplace.

As per our study, Sales strategy can be drawn based on key sales areas which are First time buyer, some promotional offer like exchange old vehicles and Export market.

Main drivers for Industry:

Peugeot need to do the proper ground work before entry. Proper work and macro level analysis could make smooth road.

Indian Car market can be classified as low range, Budget, Premium and luxury segments. Peugeot vehicles could fit in this category except low range. But the company has to customize the product as per Indian taste and market demand.

As per our some study, it is noted that many MNC repeats same products in many markets without considering local market dynamics.

Overview of Peugeot group

It is second largest car manufacture in Europe after Volkswagen.

Europe is the biggest market for PSA with 59% share in 2013 and Asia (excluding India) is the second biggest market with 21% share.

China, Latin America and Russia are major markets of the group. India could also be part of this list.

China is the largest market with 26% growth in 2013. The political issues in Russia are at the moment and facing some ban from the European Union and USA put forth a stall in the economy. ACG forecast that it would have a negative impact on car sales.

If Peugeot will start its sales, Peugeot would have 1% sales share of its total group sales. Due to new brand the initial sales will be increased few years.

Cultural Dimension also plays important role in Doing Business. However, most of the dimensions are favourable for business. Language would be issued. Proper intercultural training will help for best business practice.

Product Position

PSA group Top selling Models of 2013:

However Peugeot and Citroën do not overlap but still some work need to do to make it clear differentiate and completely not to overlap.

Some of the product which belongs to Low range in Central Europe, it would have a position in the budget segment in India like Skoda and Volkswagen.

Conclusion:

Many a times, foreign players tend to just launch the product with alliance with some small brand. Followed by some basic advertising campaigns. But this is not enough to build a successful journey in a market like India. Even one small mistake can make the life difficult here.

Source:Autobei

This article is part of “Market Entry Strategy- Global Markets to India”