Daimler Hero Commercial Vehicles (DHCV), the Indo-German joint venture founded by the Hero Group and Daimler AG a few weeks ago, has finalised Oragadam near Chennai as the site for its commercial vehicle production plant. The key factors that favoured the choice of the Oragadam site for the production plant are its proximity to major suppliers, Chennai’s infrastructure development, growing transport facilities and skilled workers in the region.The memorandum of understanding (MoU) to this effect was signed in Chennai in the presence of the State Chief Minister, Mr. M. Karunanidhi, by Mr. M. F. Farooqui, Industry Secretary, Tamil Nadu Government, Mr. Sunil Kant Munjal, Chairman, Hero Corporate Service, Mr. Andreas Renschler, member of the Daimler Board of Management and Head, Daimler Trucks, Mr. Marc Llistosella, CEO of DHCV, and Mr. Amit Chaturvedi, Co-CEO.
The plant site covering approximately 400 acres is in the direct neighborhood of several supplier parks where Daimler Hero Commercial Vehicles could also secure sites for future suppliers.
The new facility, construction of which will start soon, will produce commercial vehicles under a new brand name for the Indian and export markets. Scheduled to start production in 2010, the plant is to turn out up to 70,000 trucks in its initial phase of operation. Production of trucks for export will be taken up later.
DHCV is aiming to achieve a localization rate of up to 80 per cent in order to optimally utilize the cost advantages. The proximity of the plant to the local supplier industry will help utilize the cost advantages.
Daimler AG and the Hero Group formally signed the contract establishing the joint venture in Delhi on April 21. Total investment in the joint venture will amount to over 700 million euros over the next five years. The equity capital brought in by Daimler and the Hero Group will amount to 360 million euros. Daimler will contribute 220 million euros of this amount as direct foreign investment in India.
“Joint venture well poised to take on competition”
Daimler Hero Commercial Vehicles, has appointed Mr. Marc Llistosella as the CEO of the Indian company. The new JV with its plant in Chennai will roll out trucks from 2010. He recently spoke to MOTORINDIA about his company’s plans for the Indian market.
Question: How do you view the current Indian commercial vehicle market? How important is it for the Daimler Group considering the fact that you have now entered into a JV agreement with the Hero Group?
Answer: India is one of the fastest growing markets of the world and part of the strategically important BRIC countries. With Daimler’s global truck technology and competence and Hero’s local network and knowhow, we would like to participate in this potentially rich growth centre and play a major role in the Indian truck industry growth.
Q. Which product segments does the Daimler – Hero JV focus on?
A: We plan to enter the Indian volume market with localized variants of Daimler Trucks’ truck portfolio. However, it is too early to talk about specific models. The portfolio will range from LCVs and MCVs to HCVs.
Q. Are you looking at both the truck and bus (cargo and passenger), segments in India?
A: We are looking at only trucks for the time being. Passenger segment development may be taken up later.
Q. Will the Indian JV cater only to the Indian domestic market, or is there a plan to export vehicles to nearby markets?
A: We will initially turn out products for the Indian market and later on use India as an export hub for the other emerging markets with potentially high demand.
Q: What is the level of indigenisation in the vehicles produced ? Will you be manufacturing or importing the power train and transmissions required ?
A: In general, our target is to localize all components if it proves economical. However, it is clear that we must localize all bulk parts in view of the logistics factor. Depending on the vehicles and technology, we hope to achieve a localization rate of up to 80 per cent.
Q: India is a highly price sensitive market. Would you be able to compete in the Indian market dominated as it is by prominent manufacturers like Tata Motors, Ashok Leyland and Eicher Motors?
A: Marketing of vehicles in India won’t be a problem with our competitive pricing. The global premium approach of Daimler Trucks is the same for all products, including the future Indian product portfolio.
