AFP

Frankfurt: German auto group Daimler has confirmed that it will set up a new truck plant in Chennai. Construction of the factory will begin shortly and will aim at producing 70,000 vehicles a year, starting 2010.

Daimler operates in India via a joint venture formed recently with the Hero Group, known as Daimler Hero Commercial Vehicles (DHCV).

The venture is to receive more than $1.09 billion, in funds by 2013, from both companies and foreign investors, Daimler said.

The company is trying to catch up with competitors who have already established a presence in a booming Indian market.

Meanwhile, sales at the Mercedes-Benz Cars division increased 1.8% in June as more drivers bought the Smart two-seat model. Sales rose to 119,300 cars and sport-utility vehicles from 117,200 a year earlier. Six-month deliveries advanced 8.2% to 668,100 vehicles.

Daimler chief executive officer Dieter Zetsche has a target of increasing sales in 2008, helped by growth in Russia and China and new models such as an updated SL-Class roadster.