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The PSA Group has officially announced its entry into the India market through the Citroën brand. The French carmaker is targeting two percent of the Indian passenger vehicle market by 2024. Last week, there was an India Suppliers Summit held, which drew over 500 automotive component vendors and both Tier I and Tier II suppliers. It is learnt that PSA has already chosen 150 Indian suppliers from these.
The PSA group is implementing its 'Push to Pass' strategy to increase its sales outside Europe by 50 percent. For the Indian supplier fraternity, business from the PSA Group presents a huge opportunity. Supplier selection and retention in Groupe PSA's global supplier base are guided by corporate and social responsibility. As a result, the selected suppliers will have access to all of the PSA Group's business opportunities worldwide – which totalled to a humungous 42 billion Euros (Rs 3,24,702 crore) in 2018.
The PSA Group's localisation goals
Groupe PSA sourced made-in-India components worth 250 million euros (Rs 1,911 crore) last year. When asked if five years is a realistic timeline for the sourcing figure to touch a billion euros (Rs 7,644 crore), Michelle Wen, executive vice-president, Global Purchasing and Supplier Quality, Groupe PSA, said that she would like it to happen much earlier.
Export of made-in-India Citroëns will play a big role for the PSA Group to achieve economies of scale to justify localisation of over 90 percent from the start of production. This will involve a very high 98 percent localisation for the vehicle and 90 percent for the C5 Aircross engine.
Groupe PSA has two joint ventures in Tamil Nadu with the CK Birla Group for vehicle assembly at Thiruvallur, and a powertrain plant with AVTEC, which was inaugurated on November 22, 2018. These will help the company achieve this high level of localisation.
Year five of straight growth
The PSA Group will globally launch 116 new cars across its five brands – Peugeot, Citroën, DS, Vauxhall and Opel – by 2021, as part of its 'Push to Pass' strategic plan.
The 'Push to Pass' strategy was unveiled in 2016 and is designed to turn the company into a “global vehicle manufacturer.” Groupe PSA has completed the first phase by recording its fifth consecutive year of growth since the first plan was launched. In this time, PSA has acquired Vauxhall and Opel – which posted a profit in 2018 for the first time in 20 years.
The second phase of the plan runs from 2019 until 2021, and aims to grow the company’s global presence with entry into several new markets, including India. Expansion of its product range and a focus on electrification and digital technology are some of the manufacturer's goals in the upcoming phase. In fact, the brand plans to accelerate the electrification of its model range and launch Peugeot in the North American market during this period.
At the Supplier Summit, Michelle Wen – along with Emmanuel Delay, executive VP and Head of India-Pacific, Groupe PSA and Gillies Le Borgne, senior vice-president, Engineering & Quality, Groupe PSA – presented the group strategy for India as well as for global programs, including electric and hybrid vehicles at the Supplier Summit.
Quality, cost and delivery performance, TCO
Michelle Wen, executive vice-president, Global Purchasing and Supplier Quality, Groupe PSA, said: “In a context of fierce competition, purchasing has a key role to play in terms of performance for projects and serial life production phases. We are looking for ‘QCD’ (Quality, Cost & Delivery) performance, not only the lowest cost per part, but also TCO (Total Cost of Ownership). The Monosokuri approach, gathering engineering, manufacturing and purchasing will make the difference towards competitors, and our sourcing with Indian suppliers will lead to newer verticals and opportunities to meet customer needs and respond to the technological shift. This summit also focuses on developing and integrating a broad network of Indian suppliers through encouraging collaborative product development, orchestrating and connecting information across the supply chain, and understanding an ecosystem of suppliers and partners within it.”
The ethical, environmental and social criteria are crucial for the selection of a new supplier – criteria regularly assessed by a third party. This assessment covers environment, labour practices, fair business practices, and sustainable procurement and is used for the risk identification as well as for the selection of sites to be audited. Each supplier assessed receives a score card that covers all relevant aspects of the evaluation.
(Inputs from Sumantra B Barooah)
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