India’s Hero Group and Daimler have signed a contract establishing the Daimler Hero Motor Corporation commercial vehicle joint venture.
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Approval for the new company was issued by the Indian government in March 2008, and the two partners now plan to proceed rapidly with the implementation of the joint venture.
The JV will initially produce light, medium, and heavy-duty commercial vehicles for the Indian volume market under a new brand name and the search for a suitable production location is currently under way with negotiations being conducted with three Indian states. The talks are expected to conclude shortly.
Once a decision is made, construction will begin on a plant that will start manufacturing commercial vehicles in 2010. The new company is aiming to achieve a localisation rate of up to 80% in order to optimally utilise cost advantages.
Production of commercial vehicles for export to other emerging markets will be launched at a later date.
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By GlobalDataThe total investment of the German-Indian joint venture will be over EUR700m over the next five years.
The equity of Daimler and the Hero Group into the new company will total EUR360m with Daimler contributing EUR220m in the form of foreign direct investment.
Marc Llistosella, who directed the joint venture project from the Daimler side, will become CEO of the Daimler Hero Motor Corporation. Amit Chaturvedi, currently president, strategy and business development, at Hero Corporate Service and project leader from the Hero Group, will serve as Co-CEO. Sunil Kant Munjal will chair the board. The company will be managed jointly by the two partners.
