Utility vehicle and farm tractor manufacturer Mahindra & Mahindra has formed a joint venture with International Tractors and Engine Corporation to make heavy trucks and buses.

The Mahindra group will hold a 51% stake in the company. India's leading utility vehicle manufacturer currently does not have a significant presence in the commercial vehicle market though it does offer some light commercial vehicles.

The CV market in India is dominated by Tata Motors and Ashok Leyland even though the last few years have seen the entry of a significant number of new manufacturers such as Volvo, Force Motors - MAN, Eicher Motors and now Mahindra & Mahindra.

Mahindra has been looking at increasing its presence in various automotive sectors including passenger cars (through its joint venture with Renault to manufacture the Logan) automotive components (through its subsidiary Mahindra Systems and Automotive Technologies and heavy commercial vehicles.

Mahindra will gain other benefits from the joint venture. Mahindra Engineering Services (MES) would supply engineering services to International's truck development and technology centre. It is setting up a design centre employing 300 engineers.

At the same time ITEC will source components worth $US$1bn over the next five years from the Mahindra joint venture.

"International's plan to enter India constitutes a major step in its global growth strategy," said Daniel Ustian, chief executive officer, Navistar International Corp, parent company of International Truck.

The joint venture will also be used to service markets in Asia, Middle East, Africa, Russia and Central Europe and will be ITEC's low cost product development centre.

Deepesh Rathore/Tilak Swarup