Peugeots Re-entry In The Indian Market

Peugeot is a major French car brand, part of PSA Peugeot Citron, the second largest carmaker based in Europe.

The family business that precedes the current Peugeot company was founded in 1810, and manufactured coffee mills and bicycles. On 20 November 1858, Emile Peugeot applied for the lion trademark. Armand Peugeot built the concern's rst car, an unreliable steam tricycle, in collaboration with Leon Serpollet in 1889; this was followed in 1890 by an internal combustion car with a Panhard-Daimler engine. Due to family discord, Armand Peugeot in 1896 founded the Socit des Automobiles Peugeot. The Peugeot company and family is originally from Sochaux, France. Peugeot retains a large manufacturing plant and Peugeot Museum there. It also sponsors the Sochaux football club, founded in 1928 by a member of the Peugeot family.

What Went Wrong For Peugeot In India?

Peugeot might be one of the biggest car makers in Europe, but it has absolutely no presence in the Indian market. With the Indian car market growing bigger day by day, there is no big automaker which doesnt have the presence in the sub-continent. The most recent car maker to set up operations in India is Porsche, which used to import vehicles through a third party. So why doesnt Peugeot have a presence in India?

In 1994, Peugeot tied up with Premier Automobiles. Premier is an Indian automaker which manufacturers cars under license. Peugeot offered the 309 sedan in the 90s, which failed to excite Indians. Sales were very poor and the dealership network was small. Soon, Peugeot started to run into labour trouble. Peugeot left and went missing from the Indian market for a decade.

The Peugeot 207 hatchback was seen undergoing tests to obtain governmental approval. Peugeot announced plans of setting up an Indian facility and procured land in Gujarat. The development of the plant commenced and at the 2012 Auto Expo, the French automaker showcased a range of cars including the 508 sedan, RCZ, Le Mans racer, etc.

So what went wrong for Peugeot India? Wrong entry strategy in 1994, with the wrong partner. The second coming was too late. Brand building never took place. Peugeot could have setup a small network and brought in completely built units from France to create an aspirational brand. Not committing investments for the Indian market. Wrong products offered to Indians. The Peugeot 309 was highly dated when it was launched in India

PEST ANALYSIS

POLITICAL ENVIRONMENT FACTORS: Indian Government has changed its role from controller to facilitator with prime focus on providing better infrastructure, growth oriented economic policies and right environment to attract investments. This has made giant auto manufacturers enter into India and affect the competitive environment. The liberalisation steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies, have played an equally important role in bringing the Indian Auto-motive industry to great heights. Institutionalisation of automobile finance has further paved the way to sustain a long-term high growth for the industry.

ECONOMIC FACTORS: The GDP was rising consequently for the last 5 years which led to increased purchasing power. Not only that, the per capita income is rising, which will have positive effect on the automobiles being ventured into. Since there is cut throat competition among many players in the market, it would help Peugeot to establish in the Indian market. Increasing urbanisation of rural India also will give rise to increase in sales. The concept of service in auto industry has changed into customer care now , thus encompassing the greater value into it.

SOCIAL FACTORS The demand of cars has been fueled by following factors : Indian families are becoming increasingly nuclear Increasing Propensity to spend Increasing distances between work-place and residence. Increase in percentage of working women has increased number of earning members in a family.

TECHNOLOGICAL FACTORS Alternate Fuel: Increasing use of CNG and LPG instead of conventional fuel has made the entry of new kinds of vehicles in the market. Advent of Internet: The customer can now use the Internet to place the order and expect the manufacturer to fulfill his customised demand in the minimum time. Electric Car: With technological advancements electrical car may emerge as a

preferred option Peugeot Citroen's Air Powered Hybrid

To ght against pollution, as well as loud engines, car manufacturers have been working for several years on hybrid cars, cars that switch between using a standard internal combustion engine and electric power. The French group recently presented its revolutionary new design replaces batteries with compressed air. Under the seats a blue canister is charged with compressed air when the brakes are applied, a bit like a bicycle pump. This stored energy can then be sent back to the wheels when it is needed. It is designed to operate in three modes: internal combustion, compressed air only or a combination of the two for rapid acceleration. If the driver is constantly stopping and starting they will have a constant supply of compressed air for this process, making it ideal for those who drive in the city.

In an hours drive, the standard engine can be turned off for around 50 minutes, the rest of the time the car can run on compressed air. So fuel consumption is greatly reduced, said Guillaume Faury, Director of Research and Development at PSA Peugeot- Citron. Fuel consumption falls to 2.9 litres per 100 km, against an average of 6 litres for standard cars today.The car can only drive a few hundred metres on stored energy but the canister takes just 10 seconds to replenish as the car slows down.PSA Peugeot-Citron plans to start tting the package to some of its cars in 2016, and will also be licensing the technology to other manufacturers.

Peugeot to adopt Volkswagen strategy for India entry

Peugeot Citroen is treading the line which Volkswagen, the continents largest car producer, had adopted to make its long-awaited debut in the Indian market. The French company, which is the only large automaker not present in India, is aiming to position a premium sedan which will compete with Volkswagens Passat before gradually shifting to lower segments.

Peugeot is gunning for the launch of the Peugeot 508 premium sedan in India before the end of 2012. The car will be priced in the range of Rs 20-25 lakh. Apart from the Passat, the 508 will have to compete for space against Honda Accord, Toyota Camry, Nissan Teana and the Superb from SkodaAuto. Although volumes in this premium segment are on the lower side, which is about 1,900 units a year, Peugeot is trying to position itself as a premium brand in India before moving onto the volume generating compact hatchback segment. The company is looking at a top-down strategy for India. After its exit from the country nearly 15 years ago, the company is cautious on its re-entry.

Volkswagen, too, had marked an India entry with the launch of the Passat in 2007 before moving onto other models, both in upper and lower ends. After positioning its brand at the premium end, the German major nally launched the Polo (a compact car) in 2010, its cheapest car yet.

Peugeot is also aiming for a launch in the premium hatchback segment in India, which is also the fastest growing segment in the country. According to sources, the company is looking to enter the segment where models such as Maruti Suzuki Swift, Ritz, Nissan Micra, VW Polo and Hyundai i20 are already present.The French automaker is considering its hatchbacks like Peugeot 107, 206 and 207, being sold in European markets. Additionally, similar compact car models under the Citroen brand such as C1 are also being considered for India.

Porter's Five Forces Model for Peugeot

1) Threats of new entrants or barriers of entry

Since globalization has become popular, lot many foreign investors with capital, required technologies and management skills started to enter the Indian domestic market. Indian market really encouraged the entry of foreign companies to their domestic market and their consumption pattern has changed with this. As per the Indian market, the fast and preference of the consumers changes frequently. So it is important for a company like Peugeot to focus on this factor and bring in new models: as there are so many trendy, stylish and luxurious as well as safety guaranteed cars are conquering the Indian market. So the main threat they face is to bring in models as per consumer trend and tastes: and thereby gain their condence.

2) Threat of substitute products or substitutes The main problem when someone starts thinking about a substitute to a car is that they start thinking of other cars which can replace a car model. But the factor that has to be considered is that there chances for a person to take some other source of transportation like bus, auto or taxi to travel. This happens when a person feels that the operating cost in using a particular car is high. So Peugeot has to bring in fuel efcient, travel comfort promising and city drive friendly cars so as to compete with other automakers.

3)Competitive Rivalry

In Indian market the main companies preferred by the low as well as mid level class people are Maruti. TATA and Hyundai. Moving towards the next segment again Maruti, Hyundai and with them Honda, Volkswagen, Skoda and Toyota are in a tight competition. With regard to MUVs, Toyota is one of the market conqueror in upper middle class segment. When we talk about a price range of Rs 12,00,000 to Rs 20,00,000 Sedans, people prefer Skoda, Volkswagen, Honda and Toyota. So its clear that these companies already have a huge condence level in the minds of the consumers. For a company like Peugeot who were once a failure in the same market will have to compromise with their prots, bring in a different identity to their brand and bring in model updates with other automakers in order to survive in the market. Once they gain an identity among the consumers then they can make independent decisions and others will start following according to them. Also the distribution and supply has to be really taken care of as it was the major reason behind its failure in the 1990s.

4)Bargaining power of Suppliers The suppliers have a very little bargaining power in the Indian automobile market. This is because most of the suppliers rely upon one or two automakers to buy a majority of their products. If an automaker decides to change their supplier to improve the quality of their products, then the supplier has no choice other than either to provide the automaker with parts of required quality or to nd a new automaker as a customer. More the quality of the parts, more satised the consumers will be, but at the same time the business for suppliers gets a decline. More the parts last, less is their business.

5) Bargaining power of Buyers As the consumers are not going to buy cars in bulk, they relatively have less bargaining power. business purpose buyers are an exception to this. But buyers have changing preference and they can easily become dis-satised with products and start looking for alternatives. Also they are price sensitive.