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Daimler and Hero Close on Commercial Vehicle JV for India
24 April 2008
The Indian Hero Group and Daimler AG have finalized the establishment of the Daimler Hero Motor Corporation Ltd. commercial vehicle joint venture. 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 Daimler Hero Motor Corporation will initially produce light-, medium-, and heavy-duty commercial vehicles for the Indian volume market under a new brand name. The search for a suitable production location is currently under way. Negotiations are 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 localization rate of up to 80% in order to optimally utilize cost advantages. Production of commercial vehicles for export to other emerging markets will be launched at a later date.
The total investment of the German-Indian Joint Venture will be more than €700 million (US$1.1 billion) over the next five years. The equity of Daimler and the Hero Group into the new company will be in sum €360 million; thereof Daimler will contribute €220 million 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 Ltd. and project leader from the Hero Group, will serve as Co-CEO. Mr. Sunil Kant Munjal will be the chairman of the new company’s Board of Directors. The company will be managed jointly by the two partners.
Daimler Trucks is a division of Daimler AG and the world’s leading truck manufacturer. Its five leading truck brands—Mercedes-Benz, Freightliner, Sterling, Western Star, and Mitsubishi Fuso—generated revenues of €28.466 billion in 2007 on sales of more than 467,667 units worldwide.
The Hero Group, which was founded more than 50 years ago by the Munjal family, is now a major conglomerate with numerous divisions and products that generate annual revenues of over $4 billion. The company has an excellent network and comprehensive knowledge of the Indian market. Hero Honda Motors Ltd.—a joint venture between the Hero Group and Honda—is the world’s leading motorcycle manufacturer and has built more than 20 million motorcycles for the Indian market to date.
April 24, 2008 in Brief | Permalink | Comments (0) | TrackBack (0)
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