Impact: Peugeot Citroen might leave India image

French giant Peugeot-Citroen (PSA) started the process to close its office in Mumbai – India, as a result of the slowing economy in France.

Peugeot was planning on re-entering in the Indian auto industry after a gap of 10 years. They had even selected the place where they were going to setup their manufacturing unit in India.

PSA Peugeot Citroen announced in September it planned to spend 650 million euros ($850 million) to construct a plant in the western state of Gujarat, from which it aimed to produce its first car, the 508 mid-size sedan, in 2014.

“The group is currently evaluating the scheduling of the project, which may lead to some adjustments to the schedule as it currently stands,” said Jonathan Goodman, director relations presse, PSA Peugeot Citroen.

Leading Indian financial newspaper the Economic Times said Peugeot’s difficult financial situation, precipitated by falling domestic sales, had compelled the carmaker to put off its India plans.

In addition, the future of Peugeot’s plants in Aulnay and Sevelnord, France, is undecided beyond current production cycles, a company representative said.

Europe’s second-biggest carmaker after Germany’s Volkswagen said it sold 3.5 million cars last year, noting that prices had come under severe pressure in Europe by September and that performance across the region varied widely.

New car registrations in France have plummeted in January compared with a year earlier, as the phasing out of a scrappage bonus boosted registrations in early 2011, newspaper La Tribune’s website reports Tuesday, citing partial monthly data.