After a relatively lacklustre entry into the Indian market, Citroen India is aiming to make good on its promise of being a volume player by entering the affordable car market. The C3 is the first of the three models to be developed under the India-designed C-Cubed program. The second in this line will be the country’s first low-cost EV.
With much anticipation surrounding the pricing of the C3, and Citroen entering India’s rapidly-developing electric vehicle (EV) space, Moneycontrol caught up with Stellantis India CEO Roland Bouchara and Citroen India’s Brand Head Saurabh Vatsa to discuss the road ahead.
Edited excerpts:
A number of hatchbacks, regardless of segments, have been discontinued this year (VW Polo, Hyundai Santro) with more to follow next year (Honda Jazz). Why categorise the C3 as a hatchback when the compact SUV segment has far more consumer interest?
Saurabh Vatsa (SV): It’s going to be driven purely by the product. The C3’s design, the feedback we’ve received from our customers suggest. But it’s definitely differentiated by its SUV stance and that’s exactly what we’ve communicated. It’s a sub-4-metre hatch category. No pretence, it’s a sub-4-metre hatchback with strong SUV styling.
Do you think the market segmentation matters to consumers?
SV: You and I both know that segmentation is more of a marketing jargon. When the consumer goes to the market, they go by the budget they have and the monthly EMI that they can actually afford. Because it’s all linked to affordability.
Roland Bouchara (RB): Back in 2012, the compact SUV segment didn’t really exist. And suddenly one of the competitors launched an SUV at the price of a sedan, and everyone followed the trend. Then we witnessed something of a segment overlap, although the exodus took place largely in the sedan segment.
Are you saying the C3 will create a new niche?
RB: It’s a good question. We say, we have a B-segment hatch with SUV qualifications. We won’t call it an SUV. It has high ground clearance and upright seating. So, I don’t think we’ll be the only ones making such a product in the future.
Do you have a market share in mind that you would like to target in the B-hatchback segment?
RB: We can’t predict what the market will be like tomorrow. COVID-19 has taught us not to make predictions. So, it’s difficult to say how the segment is going to evolve. Our mission is to be a key player in the B-segment which occupies 70 percent of the market share at present. Growth with profitability is what we’re targeting. The smart car platform will see new technology, and will go electric very soon.
SV: And it’s strongly supported by industrialisation. Look at the industrialisation strategy we’ve had. We started with powertrains before we started assembling vehicles. Most manufacturers have done it the other way around. And with 95 percent localisation, we want to make it absolutely clear that we want to get in the volume game. We are firmly entrenched in the Indian market for accessibility, speed and profitability.
Given the semiconductor chip shortage, what are the number of deliveries that you’re presently prepared to make?
SV: Citroen has a very clear philosophy that if you’re launching in a country, you’re not going to be restricted by semiconductors. So, the C5 Aircross continues to make good on its deliveries. The C3 is going to be launched. Not to forget, we are in an industrial ramp-up mode. So, we’re not going to hit peak volume immediately. We’ll be slowly expanding volumes and our network. We’ve gone from 11 dealers last year, to 14 now, and will go all the way to 30 by the end of this year.
RB: If you look at our numbers you’ll notice that we haven’t been affected by the semiconductor issue as much because we’ve been working very closely with our supplier base. We’ve been able to manage this issue. And if you look at our figures at Stellantis, the C5 may not be a volume car, but if you look at Jeep, we haven’t been impacted that much.
The Central government’s six airbags as standard policy will soon come into effect. Where do you stand on the matter? Can it deter customers from purchasing a new affordable car and opt for a used car instead? Or do the long-term safety benefits outweigh how it might affect manufacturer sales now?
SV: If you look at all the regulations that have come into being, from BS 1 to where we are presently with BS6 (Phase 2) and the overall market, the A-segment has declined because the first-time buyer has moved up to a B-hatch. India was the biggest A-segment market in the world. Today, that segment is rapidly in decline. I firmly believe that in the short term, when that regulation comes in, there will be a short period of time where customers will look at what the incremental cost is and how it translates in terms of monthly EMI. At that point they might consider a used car. But all these regulatory changes have resulted in people asking for these safety elements in their cars. It won’t be a setback either for the industry, or the consumer.
The low-cost EV market has been very difficult to crack. How does Citroen intend to deal with the issue of battery costs and battery localisation?
SV: Let’s take a step back. With 95 percent localisation, we have the cost advantage and a strong vendor base that can provide cost and quality. A strong technical and R&D set-up exists for Stellantis. The platform is powertrain agnostic, so it adapts to EV powertrain easily. Therefore, without delving into the pricing of the vehicle, even with a compact EV, we are quite confident of bringing in a competitively-priced EV. Do compact EVs exist in the market? No. But we’re ready to bring it in by 2023.
Even other brands that have availed the government’s PLI scheme for local EV manufacturing seem to be hedging their bets and waiting till 2025 for a low-cost EV. Is Stellantis looking for a first-mover advantage?
RB: The question isn’t whether the low-cost EV market will develop or not, it will. The question is, when? We cannot miss this phase, and so we want to establish our position as leaders in this space. To observe, be organised and to have the know-how. And given that it’s based on the C3, to provide a level of comfort that isn’t there in the space.
One of the main technical challenges with a low-cost EV is that it provides a smaller floorboard for a battery, and therefore, limited range. In a very range-conscious market, how do you intend to overcome that challenge?
SV: You’re right. Because with every passing year, we can pack in more range and more battery density into the same space. It’s also a question of weight management. I can’t talk about how we’re configuring it. But on the electric C3 platform, we’re packaging it in an optimal manner.
Stellantis CEO said that the group would be willing to absorb certain costs when it comes to manufacturing EVs. What would those be?
SV: I think what he said was that we are looking at the vendor base in India and that we are looking at sourcing battery components locally further down the line. We are also open to partnerships in the EV space, in terms of components and other technologies.
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