Peugeot-Citroen plans to localise engine and gearbox production in Russia

Peugeot-Citroen plans to localise engine and gearbox production in Russia


Finmarket.- The French car manufacturer Peugeot-Citroen PSA intends to localise the production of engines and gearboxes in Russia, within the framework of the planned SPIC, as told by the Executive Chairman of PSA Group: Yanik Bezar during an interview with Vedomosti.

Bezar has not disclosed the amount of investment within the scope of the SPIC, on the other hand, adding that the application is still pending. “However, the essence is as follows: We plan to expand the model range of the automobiles manufactured in Kaluga. We have already mentioned Opel. We also plan to launch the production of the 4×4 version of Peugeot Expert, Peugeot Traveller, Citroen Jumpy and Citroen SpaceTourer, in order to meet the conditions of Russia. An investment in a new platform in Kaluga is also within our plans. Engine production will be localised and we are not talking about assembly only. Mechanical processing of key elements, such as cylinder heads and camshafts will also be carried out” – Bezar said.

According to Bezar, the project will be implemented with the help of local partners. “We will buy castings from local partners, however, we may perform the machining and assembly ourselves. In addition, we plan to carry out technological operations, related to gearboxes. The localisation will increase in Kaluga with each new model. We have plans to double the production volume in Kaluga, on the other hand” – he added.

Bezar has also stated that the localised engines and gearboxes will be used in all models manufactured by PSA Group in Kaluga. “We have chosen the modifications, which are suitable for this aim. The volumes will be comparable with the production in Kaluga” – said Bezar, adding that the engines are planned to be exported as well. However, such a decision has not been taken for gearboxes.

Commenting on the profitability of the localisation of engines and gearboxes, Bezar has told that the production volume of the company is not so high, however, the case on the engines and gearboxes has been studied carefully and a way of implementing the operation with a minimum and limited amount of investment has been found.

According to Bezar, in general, the profitability rate has been fluctuating around zero during the last 2-3 years. “Of course we are not very satisfied with this performance. We know what to do to increase profitability in Russia. First of all, the localisation rate of the automobiles must be increased for that purpose. We have submitted our proposals through an application for the conclusion of a Special Investment Contract with the Russian government” – Bezar said.

Bezar has added that the Kaluga plant carries out all basic operations – welding, painting and assembly, using Russian stamping. “LCV localisation rate is 40%, without the added value. The rate is the same for car models. The localisation rate will increase with each model, reaching around  50% with the launch of the first Opel model” – said the vice-president.

According to Bezar, a total amount of more than €500 million has been invested in production. “We have launched the production of four LCV models on a new platform in Kaluga within last year: Peugeot Expert, Peugeot Traveller, Citroen Jumpy and Citroen SpaceTourer. The investment in the project has reached approximately €75 million” – he added.