PSA and AVTEC start construction of engine manufacturing plant

Groupe PSA and AVTEC have commenced construction of their powertrain plant in India.

French car manufacturing group, Peugeot-Citroen, announced their partnership with the CK Birla Group to enter the Indian market in early 2018. The joint venture between Groupe PSA and CK Birla Group is said to enable the manufacturing of PSA branded vehicles to cater to the Indian market, in addition to the assembly of engines which will power these vehicles.

As a part of the 50:50 JV between Groupe PSA and CK Birla Group owned AVTEC Ltd. both entities have announced that the construction of the brand new facility in Hosur, Tamil Nadu has commenced. At this plant, AVTEC will assemble all powertrains and drivetrains that will be offered in cars sold by the Groupe PSA in India. The plant is expected to commence production by early 2019. PSA has also confirmed that they plan to export engines and transmissions from this plant as well.

With an initial manufacturing capacity of 200,000 units annually, the company states that the venture is said to receive additional funding to expand and support the long-term project in the future as well. Groupe PSA is said to invest €100 million (Rs. 700 crore) in the state of Tamil Nadu initially.

To manufacture the vehicles themselves, the second joint venture between Groupe PSA and CK Birla Group will allow both entities to utilise the Hindustan Motors Financial Corporation Limited (HMFCL) plant, situated in Tamil Nadu. Aided by a heavy amount of localisation, this will help PSA to reach the necessary cost competitiveness.

Emmanuel Delay, Executive Vice President India & Pacific, Groupe PSA, said: “The ground-breaking ceremony is a key milestone in the deployment of our strategic plan Push to Pass and it reiterates the commitment of Groupe PSA to India. With the support of our Indian JV partner AVTEC, we are confident of meeting the requirements of our customers by providing them best-in-class products driven by latest technology and manufacturing practices.”

Prabhakar Kadapa, CEO & MD, AVTEC Ltd., said: "The JV with Groupe PSA will play a critical role in deepening the Group’s capabilities in the automotive market in India. We are committed to delivering an array of advanced products and setting global benchmarks in reliability and efficiency through this partnership that will help us tap into the huge potential of the Indian automotive industry.”

The PSA Group is the largest manufacturer in France who produce 3.14 million vehicles globally, with brands like Peugeot, Citroen and DS under its aegis.