Eicher, Volvo joint venture finalized

Eicher Motors Ltd. (EML) has announced the finalization of its joint venture deal with Volvo, for manufacturing trucks and buses. EML has transferred its commercial vehicles business to the new JV company, VE Commercial Vehicles Ltd. The new company will commence operations from the 1st of July this year.

VE Commercial Vehicles Ltd. (VECV) will also handle Volvo Group's Indian truck sales operations and truck and bus service operations. The JV would be a subsidiary of EML, where Eicher and Volvo will hold 54.4 percent and 45.6 percent equity respectively.

The Eicher-Volvo JV, which was formalized in May this year, has an equity value of US$768 million. While EML is making an equity contribution of US$418 million, Volvo would be investing US$350 million in the joint venture.

Eicher-branded commercial vehicles will continue to be made at the company’s plant at Pitampur, which had a capacity of about 4,000 units per month. Volvo will also continue to manufacture trucks at its facility in Bangalore. Eicher will focus on 5-50 ton trucks, while Volvo will focus on heavy duty trucks.