PSA Peugeot Citroen, France's biggest automaker, may revive a plan to set up a manufacturing facility in India to tap surging car demand in the country, according to a person with direct knowledge of the matter.
Peugeot may spend about 700 million euros ($886 million) on the factory with annual production capacity of 100,000 cars in the southern state of Andhra Pradesh, said the person, who asked not be identified because the discussions are confidential. Peugeot executives intend to meet this month to decide on the project, before seeking approval from the carmaker's board and starting negotiations with the state government, the person said.
An investment, at a time when rising disposable incomes boost demand for cars in the world's third-fastest growing major economy, would mark Peugeot's re-entry in India more than a decade after the carmaker exited a local venture. Rival Renault SA will resume selling cars in India next year from a factory it's building in Chennai in south India.
"There is enough space for manufacturers to grow as the Indian economy expands and aspirations rise," said Ammar Master, a Bangkok-based analyst at J.D. Power & Associates. "It is a good thing if PSA enters the market as it's the last major global automaker left to come to India."
Peugeot is studying opportunities in India, said Pierre- Olivier Salmon, a spokesman in Paris. There is no decision on India and no timetable for a decision, he said.
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