Berlin: The world’s biggest truck maker Daimler AG and Hero Group chose a Chennai site for a truck plant, following AB Volvo in setting up a commercial-vehicle venture in India.
Expanding market: A Daimler Actros truck, which the company started manufacturing on its own in India last year.
The factory, part of the companies’ Daimler Hero Commercial Vehicle joint venture, will begin producing as many as 70,000 trucks a year by 2010, Stuttgart, Germany-based Daimler said on Monday by email.
Volvo, MAN AG and Navistar International Corp. already have truckmaking partnerships in India to gain wider access to an expanding market for freight-transport and construction vehicles. Daimler started making the Actros truck on its own in India last year. India’s economy in the year ended 31 March expanded 9%, second only to the 11.9% posted in 2007 by China.
Daimler and New Delhi-based Hero Group agreed on 21 April to invest euro 700 million ($1.09 billion), including debt, in the venture over the next five years. It holds 60% in the partnership and is investing €220 million in cash. The plant will make light and medium-duty trucks for India and expand to nearby markets, Daimler said.
The Indian truck market is growing about 7% a year, roughly twice as fast as mature markets in Europe and the US, said Heinz Gottwick, a Stuttgart-based spokesman for the company.
The German vehicle maker already manufactures Mercedes-Benz Actros trucks at its own plant in Pune, where the company also assembles Mercedes-Benz sedans. Daimler has set up a joint venture with Sutlej Motors Ltd to build luxury buses beginning in the first quarter. Hero Group, which runs Hero Honda Motors Ltd, India’s biggest motorcycle maker, is seeking to diversify as the market for such vehicles weakens. Sales of motorcycles and scooters in India fell 7.9% in the year through March.
Chennai is home to factories of Bayerische Motoren Werke AG,Ford Motor Co., and Hyundai Motor Co. It’s also where Tokyo-based Nissan Motor Co. Ltd is building a truck plant with Ashok Leyland Ltd, India’s second largest truck maker.