Wednesday, 15 October 2014

Peugeot Scooters


Indian conglomerate Mahindra to buy controlling 51% stake in Peugeot Scooters



The $16.5Bn turnover Mumbai, India based Mahindra group is buying a 51 percent controlling stake in French vehicle maker PSA Group's Peugeot Scooters subsidiary.




The owner of Peugeot and Citroen cars is believed to have been seeking union approval in France of a recovery plan as part of the group's "Back in the Race" strategic plan to get the vehicle maker on to a "road map to an accelerated recovery".

Mahindra Two Wheelers, a subsidiary of the Mahindra group, first entered the scooter business in 2008 through acquisition of Kinetic Motor, and sees the deal as a way of gaining access to European technology to boost a division that has been loss-making for some time, with production down by half to 10,787 units from 22,546 in the year ago period.

Mahindra has stated that a "robust portfolio in scooters" would be critical to its overall two wheeler strategy. With the Peugeot deal, Mahindra will get the research and development capabilities that it lacks and a strong European footprint.

Mahindra will acquire their 51 percent majority stake in return for a €15m cash injection, and a €13m share purchase, making the deal for half of a company that generated revenues of €99m last year worth €28m in total.

Described as the "oldest motorised two-wheeler manufacturer in the world", and "a key player in urban mobility in Europe for 116 years", Peugeot produced some 79,000 scooters in 2013.





Peugeot claims that the investment will help fund new models and secure the future of its plant at Mandeure, France, where it employs 500 people, and its facility in Jinan, China, a joint venture with Qinji, where it has a further 300 employees.

Down the years, Peugeot has racked up many notable scooter technology firsts, and is not entirely new to involvement in the Indian market - the mid 1980s saw it collaborate with Shree Chamundi Mopeds.

Mahindra Executive Director Pawan Goenka is quoted as telling a press conference that "Mahindra will not restructure Peugeot Scooters for two years, but will look to turn around the business focusing on growing volumes".

Goenka said that the existing management will remain in place at Peugeot Scooters, but that Mahindra will have three seats on the board. He went on to say that while "Peugeot will continue to remain a premium product, Mahindra will focus on the mass market and is eyeing other Asian market opportunities such as Vietnam".