Beijing: PSA Peugeot Citroen said it may build cars in India with General Motors (GM), its new global alliance partner, effectively scrapping a planned €650 million (around 4,520 crore today) investment in its own factory.

Launch pad: Citroen’s managing director Frederic Banzet speaks next to a Citroen DS5 at Auto China 2012 in Beijing. (Reuters)

“We’re not going to move forward by building our own factory as we’d planned to," Olivier said in an interview at the Beijing auto show.

“We now have GM as a global partner, and GM has factories in India, so we’re obviously reviewing our plans from the top," he said. “There are a lot of other ways to enter India now that they don’t require us to put €600 million on the table."

GM India vice-president P. Balendran said in a statement there were “no plans currently for GM and Peugeot to build cars together in India", adding: “It’s too soon to say how (the alliance) will impact India and the Asia-Pacific region."

The US car maker has an Indian joint venture with China’s Shanghai Automotive Industry Corp and sells models including the Chevrolet Spark, Beat, Sail and seven-seater Enjoy. In India, GM has plants near Mumbai and, Halol in Gujarat.

Peugeot exited India in 1997 after the failure of an earlier joint venture with Premier Automobile Ltd, and had been seeking to re-enter the fast-growing market for at least two years before announcing the plant investment in Gujarat state last September.

Amid mounting European losses, Peugeot flagged unspecified “timetable adjustments" to the project in January, two months after breaking ground at the factory site.

Peugeot is likely to stick to its earlier plan to enter the Indian market with a small car and a compact, Olivier said, declining to give details.

GM and Peugeot announced their broad-based alliance in vehicle development and production on 29 February, along with a €1 billion Peugeot share issue that saw Detroit-based GM acquire a 7% stake in Europe’s second biggest automaker. The partnership with Peugeot is essentially a “Euro-centric play", GM chief executive Dan Akerson told reporters in Beijing, adding that cooperation opportunities also existed in Asia, South America and in specific vehicle technologies.