Impact Of Citroen On The Indian Market | Challenging Road Ahead ?

‘Vocal for local’ being in vogue these days, how well this foreign brand will hold the ground is a test of time. Moreover,India is a tough market and could prove a tough nut to crack for new, relatively unknown manufacturers like Citroen. The French carmaker would also have to face off against established players like Maruti-Suzuki, Hyundai, Toyota, Tata, and Mahindra. In fact, globally established car manufacturers constitute less than one per cent of the market share in India despite being in operations for more than a decade. Thankfully, Citroen has opted to manufacture cars locally in India to give them the much-needed leverage to perform dynamically in the market.

PSA group-owned Citroen is a formidable carmaker. It overcame bankruptcy in 1974 and is currently a profitable automaker in Europe. However, PSA cannot imply the same European strategies in India and will need to adopt the “Indian in India” philosophy. The carmaker can’t afford to go wrong in an important market such as ours, where car sales are expected to undergo profound growth.

However, the auto industry is facing a heavy headwind amidst the global economic downturn, semiconductor shortages and supply-chain constraints. Moreover, the sales data suggest that lowering the sales volume for small cars in India is a case of concern. Nevertheless, PSA and FCA merged to form the Stellantis brand , which will give much-needed support in terms of architecture-sharing, supply and logistics, R&D and sales network.

Despite how fundamentally good the proposition of C3 is in the market, with its pricing and offerings. They also need to tick all the essential boxes such as service network, sales experience and reliability to establish themselves in The Indian market. Citroen marked its entry into the Indian market with the C5 Aircross SUV last year. To read our impression on C5 Aircoss, click here. Well, a higher price tag hindered the sales growth of the SUV. Recently, they launched the much-awaited first of the three models developed under the India-designed C-Cubed program, the C3 hatchback. The pricing of C3 (Rs 5.71 lakhs- 8.06 lakhs)  is a Citroen trump card that will pave the way for the brand’s presence in the Indian market. However, to establish itself in the Indian market, Citroen must streamline its challenging service network, sales experience and reliability concerns.

Citroen has built a positive impact by partnering with CK Birla-owned plant to produce an engine and powertrain in Hosur, Tamilnadu. Tata Consultancy Services (TCS) has been roped in for engineering and technology. According to the reports, the company has signed an MoU with Tamil Nadu to invest Rs 2,400 crore. The brand has established a vehicle assembly setup at Thiruvallur, Tamil Nadu, to cater for the CKD operations of C5 Aircross. The same plant is also responsible for the manufacturing of the recently launched C3 hatchback. Citroen has also partnered with local vendors for parts and spares, which helps to boost the local economy and employment.

Citroen entered the Indian market with the ambitious plan to be a mass-market player. The talks of an affordable EV based on a C3 hatchback are underway and are certainly expected to hit our shores soon. This move will indirectly strengthen the knowledge pool for upcoming innovation and development of the electric vehicle. Citroen’s initial moves look pretty promising, but the brand needs to keep a rational approach throughout its journey in the Indian market. History lessons from the past suggest a sign of caution for the newcomers in the complex yet rewarding Indian market. But, all-in-all, with a strong focus on localization and a mass-market approach, Citroen’s journey would be rewarding if they do not burn their wallet and keep cash flow in check.