Daimler AG and Hero Group together announced to dissolve the Daimler Hero Commercial Vehicles Ltd. joint venture in India. The completion of this transaction depends on the regular closing conditions.
Daimler Trucks to own 100% of commercial vehicles project in India
The economic situation and the continuing weakness in demand in India have necessitated a repositioning of Daimler Trucks' partnership with the Hero Group in India. In the future, the Hero Group will focus on its core business operations and return its 40 percent stake in the two partners' joint venture, Daimler Hero Commercial Vehicles Ltd., to Daimler Trucks.
"I really regret the Hero Group's decision, but Daimler Trucks will nonetheless enter the truck volume market in India.” said Andreas Renschler, the Daimler AG Board of Management member responsible for Daimler Trucks and Daimler Buses. “Nothing has changed regarding our plans to manufacture trucks in Chennai. I’m counting on continued good relations with the Hero Group, whose expertise regarding the Indian market is very important for us.
Said Sunil Kant Munjal, Chairman, Hero Corporate Service Limited.: "In light of the current economic downturn, declining market conditions and the Group’s strength, Hero Group has decided to maintain its focus and continue to grow its core business and not to pursue the commercial vehicles business at this time."He added that, "the decision is a result of amicable and mutual decisions between the partners and we shall continue to explore doing business together in the future."
Daimler Trucks' total investment in India will amount to more than €700 million over the next four years. The equity capital invested by Daimler so far, which amounts to €24 million, has already been injected as direct foreign investment.
Daimler to continue with its commercial vehicle engagement in India
The Indian market is clearly defined for Daimler Trucks as a promising market future.
Growth in the commercial vehicle segment will focus on the developing countries and emerging markets, especially the BRIC countries.
"The current economic situation does not change Daimler Trucks' long-term strategy regarding the BRIC markets. A crucial aspect of Daimler Trucks' involvement is the market's strategic significance for our growth in Asia. For Daimler Trucks, India is more than just a market; it's the key to a completely new generation of products," Renschler continued.
"However, we have to realize that the economic crisis does not pass India without any impact. But this gives us more time since Daimler Trucks will not position trucks in an economic downturn. But nevertheless, nothing changes in our plans in India", Renschler said.
After the acquisition of the Hero shares the company will be renamed. The new company will initially produce light, medium, and heavy-duty commercial vehicles for the Indian volume market. Production of trucks for export to other emerging regions will be launched at a later date. A new production plant is already under construction in Chennai for this purpose.
Daimler Manager Marc Llistosella remains CEO
Marc Llistosella will be responsible for the new production plant in Chennai. Approximately 280 employees are already working there. "I also regret the disengagement of our partner Hero, but I am very confident that we will continue to forge ahead with our entry into the Indian market rapidly and successfully," said Marc Llistosella, CEO of the previous joint venture.
Hero group pulls out of Daimler-Hero JV
