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DaimlerChrysler to invest $67 mn in India Plant

DaimlerChrysler to invest $67 mn in India Plant
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First Published: Thu, May 10 2007. 01 17 PM IST
Updated: Thu, May 10 2007. 01 17 PM IST
By Santanu Choudhury/ Bloomberg
New Delhi: DaimlerChrysler AG, the world’s second-largest luxury carmaker, will invest $67 million (Rs274 crore) to build a factory in India, where an expanding economy and rising disposable incomes have spawned a set of high-spending customers.
The factory, to be located at Chakan in the western state of Maharashtra, will employ 350 people initially, Joachim Schmidt, chairman of DaimlerChrysler India said. It would have a capacity to produce 5,000 vehicles a year, he said.
“There is a lot of potential because India is improving dramatically in all aspects,” Schmidt said. “That’s why we see double-digit growth from the luxury car market in India.”
Luxury car makers such as Bayerische Motoren Werke AG and Volkswagen AG’s Audi unit have either opened factories or dealerships to sell their cars in India as economic growth increases the number of millionaires. Automakers last year announced a combined $5 billion of investments in new factories in India by 2012.
DaimlerChrysler currently assembles the E-Class, C-Class and S-Class models at a factory in Pune in Maharashtra. The land for the existing factory is owned by Tata Motors Ltd, India’s biggest truck and bus maker.
After construction of the factory, the company will shift all its existing operations to the new location.
Volkswagen, Audi
Volkswagen in November said it will spend 410 million euros ($542 million) to set up a factory in Maharashtra to make the Passat and other models. Its affiliate Audi AG will begin building the A6 sedan in India this year.
Bayerische Motoren Werke AG, the world’s biggest luxury carmaker, in March opened its first factory in India to assemble the 3-Series and the 5-Series models in the port city of Chennai. The plant has a capacity of 1,700 units a year.
DaimlerChrysler sold 2,121 cars in India in 2006, 11 percent more than a year earlier, the company said in a Jan. 2 statement.
India has 36 billionaires with a combined wealth of $191 billion, more than in Japan, the world’s second-biggest economy, according to Forbes magazine’s annual survey. The nation had an estimated 83,510 people with financial assets of at least $1 million at the end of 2005, up 37 percent from two years earlier, according to the 2006 World Wealth Report published June 20 by Merrill Lynch & Co. and Cap Gemini SA. The benchmark Sensitive stock index has quadrupled in the past five years.
Actros Trucks
India’s car sales may triple to 3 million units by 2016, according to the Society of Indian Automobile Manufacturers.
The new factory in Chakan area in Pune will be located on a plot of 100 acres, triple the area of the existing unit. One- third of the land will be used for the new facility and the remainder will be kept for expansion.
The company may also decide on making trucks, including Mercedes-Benz Actros, at the new plant in a year. “We have space for this,” Schmidt said.
The company last year sold 50 imported Actros trucks in the country, he said. “There will be demand for high-end trucks in India,” Schmidt said.
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First Published: Thu, May 10 2007. 01 17 PM IST
More Topics: Corporate News | World Business |