Gujarat was slowly and gradually attracting all the carmakers to open up facilities, and Ahmadabad was the centre of it. However problem have started bubbling up now as PSA Peugeot Citroen who have announced to open a 1.70 lakh capacity plant which required an investment of about 4,000 crore in Sanand may bottle up the plan. In the ongoing Beijing Auto Show, the company has announced that they are contemplating to scrap off its plan to set up a facility in Sanand. As the company has got into a new JV with American car maker General Motors, the company is going to bundle up the plan to open its own factory in India.
Although Peugeot is sticking up with its plan to roll out a small and a compact car in India, but with the surmounting losses in Europe, Peugeot’s plan in Sanand was postponed; the groundbreaking was done in the month of January this year. General Motors and Peugeot got into partnership this February, General Motors now have a stake of 7% in the European company that it acquired with an expenditure of Euro 1 Billion. The company does not want to dig a hole in their pockets as they have made a pact with General Motors; the American brand already has facilities in India so it is pretty obvious that Peugeot is going to make use of the already built facilities rather that spending 600 million Euros to build its own.
Officially, both General Motors and Peugeot India have denied this statement; the Vice President of General Motors P Balendran stated that that there is no such development and the statement given by Peugeot is incorrect. Peugeot officials seem to be on the same line and the Indian subsidiary of the company had no clue about the development Last year Peugeot officials were make regular visits to Gujarat and the company had serious plans to open up a facility in Gujarat, that was even taken to the government officials. In September 2011 the European company official announced an investment of Rs.4,000 crore to set up a facility that had the capacity to produce 1.70 lakh units per annum. Then Peugeot announced that the production with start in the year 2013 with 5,000 people working under the company and the capacity would be increased later on from 1.70 to 3.40 lakh units per annum.