Mahindra & Mahindra Ltd. is in advanced talks to acquire the scooter business of French carmaker PSA/Peugeot-Citroen, three people privy with the matter told Bloomberg. Two of the sources said that an announcement may soon be made.
Once Mahindra acquires PSA's motorcycle unit, it would gain western scooter-making technology, allowing it to better compete against rivals Hero MotoCorp Ltd. and Honda Motor Co. in India, where scooter sales jumped 23 percent in the year ended March.
Hero and Honda Motorcycle & Scooter India Pvt. together control around two-thirds of the country’s two-wheeler market. Divesting PSA’s scooter business would be a strategic move for chief executive Carlos Tavares, as the unit has been posting losses for a decade.
The sales of the scooter business, which logged an 8-percent jump in sales in 2013 to 79,000 units, could help Tavares turn around PSA to profit. PSA shuttered an engine site for the scooter business at the end of 2012, and has focused output at its Mandeure plant in eastern France.
Tavares told French radio RTL on Sept. 14, 2014, that the scooter business was a drag on PSA and they are working on a solution to end the burden. Mahindra starting building scooters in 2008 by acquiring Kinetic Motor – a part of its bid to take advantage of a vehicle market where two-wheelers outsell cars by around six-to-one.