Citroen has had a slow-burn start in the Indian market, first with the C5 Aircross and now with the C3. In typical French fashion, the carmaker is prioritising unique challenges that the Indian market has not yet focused on, and now has grand plans of its own. We spoke to Vincent Cobee, Brand CEO of Citroen and Saurabh Vatsa, India Brand Head of Citroen in Chennai as they spoke about challenges in the Indian market, how the country figures in the carmakers plans and what comes next for the French carmaker.
“I think there's a variety of things that have happened, some of them coming from the outside, some of them from our own making. It's fair to say that societies have evolved, the pandemic has short-term and long-term impacts, especially in terms of customer expectations towards brands. Brands need to be more visible, stronger, have clear values, and be at the same time, motivating and protective. It's true that society is also suffering from many economic challenges and the raw material inflation has clearly aggravated this in the last few weeks and months. From a company point of view, the creation of Stellantis has given us more size, more capabilities, balance between regions and technologies. It's a great opportunity for us as long as we know to manage the interaction between specific brands and a broad set of common technologies. That's true globally and also in India since, as you know, we are combining two tech centres. Being in India, we have two vehicle assembly plants and one powertrain plant which gives us a broad base of operations. The last point I'd like to add is I think the consumers are changing rapidly. I mentioned the attachment to individual mobility and brands. The keen interest for environmental protection is also accelerating — it's very challenging but also a very exciting point to enter the market because we can bring strongly value-driven brands focusing on innovation, styling, posture, but also care, comfort, and in a place where people need to be adapting to fast changes as mentioned yesterday by our CEO, we would also bring the potential for electrification, and I think we'll be able to accompany for many fast-paced changes of the market, the Citroen brand and its three products of the C-Cube family.”
“I think what Citroen has done when entering the Indian market is to have a very balanced investment approach, so we have developed a technical centre aimed for a high localization as we should be to be credible and competitive in the market. At the same time, we've used brown-field operations for both powertrain and vehicles. We've focused on exports at the start for powertrain to make sure that we would have a proper volume to be competitive, so all of this is great. The Stellantis creation is giving us an opportunity to strengthen and combine technical centres. I think we have plant coming in the Stellantis family in Pune area which will have its own balance and is also well utilized thanks to co-operation with the local OEM. I think we have a powerful setup which will give us a good platform from an industrial point of view to develop and strengthen our presence in the Indian market.”
“I think we've been adapting in a very reactive way. It's obvious that the last two years have been very challenging on many fronts — supplier development, tool making was heavily impacted by the lockdowns, but the fact that we have very capable engineering centres on the ground gave us a lot of ways to properly react since the development of this family of vehicles was led from India, so we did not suffer as much as we could have from the distance and the lockdowns because our brain was on the ground. I am quite happy to say it's valid at Stellantis level, it's valid at Citroen level, and it's valid at Citroen India level. We stuck to our plans, in terms of product development and launches, and it's a proof of this fact that right as we come out of this pandemic, we are in a position to launch the new C3 and the Citroen brand in the mass-market in India.”
“There's two-three things out of this. First, obviously we will protect the launch — this is a policy of Stellantis globally and this is probably the fourth car I am launching during the pandemic, so we'll protect launches, both from an engineering focus but also from chip allocation, supplier focus to make sure we satisfy the customers very early on into the launch. It will be true of the new C3, and we'll make sure the vehicles are available to the customers during the launch period. We all know there is a high level of engagement into the car purchase for Indian customers so we made sure that there would be a variety of personalization options available, and we've articulated this in a proper way from an industrial point of view where we will give options, we will give choices and we ensure that the way those options would be installed on the car, satisfying both tough competitiveness but also quality assurance towards the customer.”
“Clearly, there is a broad statement to be made but the engineering competence in India is extremely high, and the way we approach all of our investments is a rational, careful ramp-up. It's true of industrial with brown-field plans, it's been true of engineering centres, so we've articulated expertise which is in-house. We have execution, or local knowledge which is a combination of in-house and outsourced, and that's where the partnership with outsourced engineering outfits has been structured, and it will continue as a mainstream strategy which will keep the core know-how, validation, and proper management inside the company, but we will use outsourcing outfits to make sure that we are not only flexible and cost-relevant but also very deep into the Indian market knowledge, so that's a strategy that will continue. The whole program was originated in India. Clearly there's a huge dimension of engineering expertise I would say. We are using these developments, obviously engineering to some extent, supply resourcing would be a way of exports because the core of the program development originated in India. Second, the Hosur plant was based from the get-go with an export business model, and most of the Hosur plant's activity in the last two years has been focusing on exports and it will then become a local assembly provider. I think that's the right way to do it. If we want to have the right economic efficiency. Our third layer, which I believe your question was focusing on vehicle exports which can be either as CBU or a CKD — this would give us opportunities. The one we can clearly envisage today is right-hand drive markets, so here we are talking about the eastern side and the south side of Africa, and we're talking about some ASEAN markets. Africa being mostly on CBU, ASEAN being mostly on CBU but progressively evolving in CKD. Now we will also contemplate that which one is not being engaged yet to broaden the export opportunities, and on this clearly we can consider left-hand drive, and markets beyond East Africa and ASEAN, left-hand drive markets. We all know that India is one of the most competitive supply base in the world, so the C-Cube program will give us a great opportunity. When it comes to percentage, it is always a tricky question. I'd start in the coming months, the assembly would be 100% for India because we are launching in India first. We will ramp up exports from next year. To me, if I say have to say a proper balance, probably 20 to 40 per cent being exports but that's a completely rough guess, depending on timing and success in those markets.”
“I think billion dollars is not a fat number. We are talking several hundreds of millions already today, and that could be powertrain units, or that could be components. I think that's not news to you, that's the level of competitiveness and technological know-how of the Indian supply base. I think our CEO yesterday talked about the evolution of combustion engine manufacturing — it's quite clear that as energy transition happens in Europe and North America, there will be a natural tendency to focus the assembly of combustion engines in some specific markets. You know better than I do, but India has a lot of specific knowledge when it comes to aluminium casting and powertrain related component manufacturing, so we see in the short, middle and also in the longer term, a lot of opportunities to export from India and it's part of the economic equation of Indian industrialization.”
“Those subjects are extremely fast evolving, and electrification requires an ecosystem. It requires quality of electricity, it requires a charging infrastructure, product offers, and consumer readiness which is probably the largest challenge, and when you do this, you have enablers, and the enablers can be on one side government subsidiaries to enhance and accelerate the energy transition, but also industrial policy because when you talk about electric vehicles, fully-electric vehicles, you are moving the powertrain which is an industry well-established in India, and it represents at least 20-25 per cent of a vehicle cost to an electric drivetrain which, today, is not industrialized in India and represents 40 per cent of the vehicle. There's a massive game change between the two. Generally, globally the way Stellantis has positioned itself is to say we need to be involved in this electric drivetrain in a more or less integrated way. That means electric models, inverters, and also means batteries. In the last 18 months you've seen Stellantis make a lot of announcements in terms of battery plant developments in Western Europe and in North America in joint ventures. I think the question which is an open question today when it comes to India, is it a reality today in India, if there's no real battery-making capabilities, be it at a cell, module, or a pack level, and also for drivetrain when it comes to motors and inverters. Some elements will obviously be quicker to adjust than others. Electric models, we can hope it will happen quite quickly. Pack assembly will happen quite quickly. When it comes to modules, especially cells, it's a different game, and it's a combination of political intention, industrial policy, but also volume because here we are talking hundreds of millions of investments that requires volume to be put in front of us. I think the answer was why not — there's no plan as of today from our side, let's be clear, but we know that moving from an early adopter to mass adoption we will require certain decisions, which is where we are in Europe. This is where we will be in the US very soon, and one day it will come, but here I want to be very clear — most choices are driven by the local needs and wishes. Not every market will have the same policy, and as an OEM, we'll support and follow the policy. I gave the example of South America which is quite different. I think in India, with all its specificities will make its own choices and we will adjust to that.”
“First, if I give a broader picture of Citroen, Citroen is a million-car brand. Obviously the last two years had the impact in terms of total volume but that's the industry. We want to move this million-car brand 85% Western Europe, to say, a million and a half car brand, we have more than a third outside of Europe. Basically we want to grow Europe to a million cars, we want to go outside of Europe to half a million. What are the engines for this growth outside of Europe? India, South America, Middle East & Africa, and then ASEAN. India will have a role to play. How big? Depends on our success and we want to be extremely clear — it starts with value, value drives volumes, volumes drive profits. If we do it the other way around, it is going to be difficult. India will have two key-roles — it's one of the engines of growth outside of Europe, and it's also a very capable hub — industrial, technical, and obviously sales. It will be very strong in their own industrial footprints. We have a lot of ambition from volume, but we do it in a very respectful way. Is India going to be a Top-10 market? The answer is obviously yes, because of the size of the market, so that's a given.”