Daimler, Hero ink truck JV
Barely four days after Volvo announced its tie-up with Eicher, MNC auto major Daimler Trucks has announced a joint venture (JV) with the Hero Group to manufacture light, medium and heavy-duty commercial vehicles.
Both companies have signed a shareholder agreement, and are in the process of submitting an application to the Foreign Investment Promotion Board (FIPB).
ET first reported on the negotiations between the Munjals of the Hero Group and the Stuttgart-based auto major on November 2. The JV would possibly use Argentum, a company owned by SpiceJet MD Ajay Singh and former Hyundai India boss BVR Subbu for contract manufacturing.
Mr Subbu told ET: “(Argentum) has indicated its ability to contract-manufacture and has approached a number of global manufacturers, including Daimler for creating facilities for contract assembly of vehicles. But it’s too premature to comment further. We believe we can offer Daimler cost-effective manufacturing solutions.”
Contract-manufacturing apart, the JV will locally produce light, medium and heavy-duty commercial vehicles for the Indian volume market followed by production for export markets. The vehicles produced will be variants of Daimler Trucks’ current product portfolio, but will be tailored for the Indian market.
The shareholding pattern and investment details of the JV have not been announced. When contacted, a senior Hero Group executive said these details were still being worked on.
According to auto analysts, the top-end specialised product portfolio of Mercedes-Benz trucks would likely be rolled out from DaimlerChrysler India’s new Chakan plant. The more volume-oriented, lower-end ones will probably be handled by the new JV. Details of the JV will be announced at the end of the first quarter of 2008, when project details are finalised, an official statement said.
According to the statement, local manufacturing operations for special applications of Mercedes-Benz trucks and bus bodies will continue for the time being at DaimlerChrysler India. Daimler Trucks are currently present in India with local manufacturing operations of Mercedes-Benz Actros in Pune.
Daimler Buses recently announced its plans to sign a cooperation deal with Indian company Sutlej Motors, and will begin producing bus bodies for Mercedes-Benz luxury coaches in Pune in the first quarter of 2008.
Sources say the Hero Group’s strong position in the components business, its manufacturing experience in two-wheelers, long association with another MNC partner Honda in the two-wheeler space, and strong distribution network went in its favour.
The Rs 30,000-crore Indian CV market has been seeing a lot of action, of late. Hero-Daimler is the fourth commercial vehicle JV to be announced this year. In October, Nissan and Ashok Leyland had announced an alliance for light commercial vehicles. Earlier this week, Volvo and Eicher announced a JV agreement.
In early 2007, utility and tractor major Mahindra & Mahindra had formed a JV with US-based International Engine and Truck Corporation for making heavy trucks. The recent CV alliances include the JV between German truck maker MAN and Pune-based Force Motors for heavy and light commercial vehicles and Tata Motors’ tie-up with Fiat’s sister company Iveco.
India’s CV sales clocked a flat 4% growth in the April-November period. However, most of that growth came from light vehicles — passenger and goods carriers. LCVs clocked nearly 15% growth, while medium and heavy trucks were down nearly 10%. After the success of the Tata Ace light truck, it has become the new Rs 1-lakh car segment for the commercial vehicle industry with all players developing products in that category.
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