The Hindu Business Line : Premier returns with compact SUV Rio

Mumbai, Oct. 28 Premier Ltd (formerly Premier Automobiles) has made a comeback into the passenger car segment with the launch of a compact sport-utility vehicle called Rio in collaboration with China’s Zotye Group. The first batch will hit showrooms next month and deliveries will begin in December.

The SUV will have three versions priced at Rs 5.25 lakh, Rs 5.5 lakh and Rs 6 lakh (ex-showroom Pune) apiece. It will be produced at Premier’s Chinchwad plant near Pune with monthly numbers of 500 units till end-March 2010.

Zotye is barely five years old and has a manufacturing plant in Shanghai which rolls out 100,000 units of the Rio annually. The key difference in the India chapter is that Premier will retail a diesel version, fitted with the Peugeot TUD5 engine, while this is petrol in the case of China.

It now remains to be seen if Zotye will have a buyback arrangement with Premier for the diesel version, though sources say this is quite likely. Since the Rio is less than four metres long and fitted with a 1.5-litre diesel engine, it qualifies for the lower excise duty of eight per cent.

The local content in the Rio is only 25 per cent, which includes the engine, but the production costs would still be in check because most of the parts are imported from China. To that extent, sources say, Premier would comfortably make a profit on the SUV though issues such as after-sales service are critical to its success here.

Premier has 30 dealers, mainly in the western region but plans are underway to increase this to 75 by January (by focusing on the north) and to 100 by April 2010 when the whole country will have been covered.

Premier had alliances with Peugeot and Fiat through the 1990s after which it went through a period of restructuring. It had two plants in Kurla and Kalyan near Mumbai but has since moved base to a single facility in Chinchwad.

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