India’s Hero Group and Germany-based auto manufacturing giant Daimler AG on Monday entered into a Rs 44 billion ($1.1 billion) joint venture to manufacture commercial vehicles.
The joint venture Daimler Hero Motor Corp's chairman, Sunil Kant Munjal, told reporters the new company would start its production by 2010.
"We are yet to finalise the location for setting-up the plant. We are looking for sites at Pune, Chennai and in Haryana. The decision in this regard will be taken within two months," Munjal said.
While choosing the location for the new manufacturing plant, the auto giants would look into issues of easy availability of manpower, accessibility of supply chain and other factors.
The JV will have an initial capacity of 70,000 units and will manufacture only light and medium sized vehicle. "We will go ahead with our plans for manufacturing heavy vehicles later," said Andreas Renschler, member of Daimler AG Board of Management.
Daimler would invest about Rs 13.86 billion in the current fiscal, he said.
The auto majors are hopeful that with the Indian economy booming and infrastructure facilities increasing, the demand for commercial vehicles will also go up.
Daimler has a commercial vehicles and bus assembly plant at Chakan, in Pune district of Maharashtra. The company has five truck brands, namely the Mercedes-Benz, Sterling, Western Star, Mitsubishi Fuso and Freightliner.
Last month, the Cabinet Committee on Economic Affairs (CCEA) approved Daimler's total investment of Rs 16.5 billion, which will constitute 60 per cent of the equity capital in the JV.