You cannot succeed in India unless you are a purely India-based operation: Citroen brand CEO Thierry Koskas

The all-new C3 Aircross SUV (Image source: https://www.citroen.co.uk/)

Global executives from Citroen to including global brand CEO Thierry Koskas visited New Delhi recently to launch the French marque’s all-new C3 Aircross SUV in the subcontinent. Citroen, acknowledged for historical innovations since the 1960s that include the hydropneumatic self-levelling suspension, has been one of the last major foreign entrants in the Indian market but its keen focus on SUVs indicates it is taking aim at the sweet spot of a fast-growing market. Koskas told Moneycontrol exclusively that the company is evaluating the possibility of bringing in ethanol-compatible 'flex-fuel' engines; will double its number of dealerships; and could introduce a sedan here in the near future. Edited excerpts from the interaction:

How has the ride here been so far and do you plan to expand your dealer network?

India is becoming one of the biggest markets in the world. We launched, as you know, the C3 here, of which 9,000 vehicles have been sold since sales began (in July 2022), in line with our expectations. We want to have steady growth, ensure the profitability of the business of all the older dealers. And obviously, with the addition of one more vehicle and addition of many new dealers, we expect to see the volumes to grow

We mean to double and then later triple the number of dealers and to have up to 100 before the end of the year (next calendar 2024).

Will you launch a sub-4-metre compact car that is high on localization any time soon?

At the moment, we have the C3 which is obviously a sub-4-metre hatch and the C3 Aircross which is above 4 metres, 4.3 metres. (But it plays at the top of the segment) Yeah, okay. But what we do not envisage is to enter into the below-4-metre SUV segment because what we want to do is to have a very roomy car, as you know, we will be able to offer a five-plus-two version on this car with seven seats. So no, no plan to enter into a sub-4-metre SUV.

What about sedans?

I cannot comment on that. But as you know, there will be, you know, we have a strategy with the ‘3’ vehicles. So C3 is the first one, C3 Aircross is the second one. And the third one, I let you make a forecast on that, but that will be launched next year. But obviously, we will not make any specific announcement on that now.

Part of the trick in cracking India is getting the culture right. Do you see that happening?

Obviously, we can still improve things, but we are already doing that. So let me give you some concrete proof. Number one, the cars have been engineered, designed and obviously produced in India. So it's not like you take a European car and you try to introduce it in India. Also, all the marketing communication, and all the product features and so on, this is something that is not at all comparable with what you would have in Europe. Even today, we are launching the C3 Aircross in India and in Latin America, but the version that you have in Latin America is different. So I would say we have already Indianised, if I may say, a lot of our operations. You can say that we can always do better, and we can always do more, but I think that we have already been on that. I absolutely agree with the fact that you cannot succeed in India if you are not a purely India-based operation.

Localisation and scale are the keys to getting the price right for the Indian market. How are you placed on both those factors?

We are now at more than 90 percent localisation, which is absolutely, absolutely mandatory because we know how competitive the production is in India, so we want to localise at almost 100 percent. Maybe that will be complicated, to reach 100 percent. But we need to be as close as possible to 100 percent.

Is India just another flag on the globe for you or is it a key focus market?

It's absolutely a priority, not only for Citroen, but also for Stellantis (the Italian-American parent company that was formed by the merger of Fiat Chrysler Automobiles and PSA Group in 2021) as a whole. Simply for two reasons. Number one, because it's one of the biggest markets in the world. I mean, if you say 3.5 million cars a year, it may soon be 5 million. That's the forecast. So you can imagine that with 5 million, there is only probably China or North America that are bigger. And that's it. So there is a huge interest for us to be present in India. Also, from an industrial point of view, that can be also an export base for components or for us, some cars—we already export C3 in Asia and Africa countries. I'm glad that the Citroen brand was chosen to be the main brand to lead this. Being present in the Indian market, it's very challenging, but the opportunity is at the level of the challenge because if we succeed in India, it could be a great opportunity for the group.

What is the plan on electric vehicles (EVs) here?

We know that EVs will arrive at very different speeds according to the region. In Europe, by 2030 we are going full EV. North America is another one where probably half of the cars we sell by 2030 will be EV. I have the feeling that in India it could arrive quickly and probably more quickly than what we think because electric vehicles fit quite well. The usage that we have of cars, urban, suburban usage can go quickly. So if you look at the Indian market, the number of ICE (internal combustion engine) vehicles will grow simply because the market will grow, but the share of electric vehicles will grow as quickly. And the strategy that we adopted for C3 is I think a smart one, which is to electrify an existing platform, because this is what enables you to have the quickest time to market, and we were very quick to be in six months between ICE and EV. This is what we managed to do. By the way, the strategy was the same as the strategy we adopted in Europe when starting EVs, we electrified existing cars. Now we are also developing a purely dedicated electric platform. I will not say that by switching to EV we lose all our advantages or whatever because the knowledge we accumulated on making cars, building platforms and so on, can also be used to make electric platforms. So that's the strategy.

There's some talk about you bringing in cars with "flex-fuel" engines that are also compatible with ethanol-blended fuel.

We are in markets in Latin America because this is where ethanol (vehicles running on ethanol-blended fuel) is mostly developed. By the way, we see a positive impact on the environment as well. So the cars that we are making over there are ethanol-compatible, and in other regions, we'll have to see. I don't know if there will be a new opportunity but we have the technology. We could bring it in if there is a market for it.