Peugeot Scooters will remain in France: Anand Mahindra

Says will develop, strengthen manufacturing of the company in France

Mahindra & Mahindra Chairman Anand Mahindra (pictured) said Peugeot Scooters would remain in France, dispelling fears over job losses and gradual shift in production to India after his company purchased the controlling stake in that company.

Speaking to a French radio channel for the first time after inking the deal with Peugeot Motorcycle (better known as Peugeot Scooters) earlier this month, Mahindra said, "We will develop and strengthen manufacturing in France, and keep it in France (sic)".

"Our plan is not to implement a social plan but to keep employees, management and the CEO who is competent in our opinion," added Mahindra. M&M has agreed to buy 51 per cent stake in Peugeot Scooters, the two-wheeler manufacturing company of PSA Peugeot Citroen.

The struggling two-wheeler producer announced on Tuesday a new plan of resurrection titled 'plan of recovery and activity'. The new plan aims to bring financial stability in 2015 involving 90 job cuts through voluntary departures from the total of 488 employees working at Mandeure, France.

Peugeot Scooters has about 800 employees, including those working at a joint venture plant in China. It has three trading and industrial partners and also has 3,000 points of sale, most of which are based in Europe.

Peugeot, which is the world's oldest two-wheeler brand having founded in 1898, will explore the development of a new product that would be produced from its Mandeure-based plant. This new model is expected to be ready by 2017.

With all its energies focused in Europe, Peugeot is a struggling company. The company has not been able keep pace with global expansion as done by Japanese and Indian manufacturers like Honda, Yamaha, Hero MotoCorp and Bajaj Auto and remained a low volume manufacturer just like its parent company involved in car making.

"We want profitable projects and for this we need to ensure that our organisation is moving towards this goal," Frederic Fabre, managing director, Peugeot Scooters.

Presently, Peugeot is undergoing a two-month restructuring exercise. After the buyout of stake by Mahindra is complete, the Indian company has guaranteed that no job cuts will take place for at least two years.

M&M has asked the present French management to continue leading the company even as the Mumbai-based company has nominated three of its directors to Peugeot's board.