Hero Group and Daimler AG announce JV

The Hero Group and Daimler AG have signed a joint venture for the manufacture of commercial vehicles. The venture will be called Daimler Hero Motor Corporation Ltd. Formal approval for the new company was issued by the Indian government in March 2008, and the two partners now plan to proceed rapidly with the implementation of the joint venture.

Daimler Hero Motor Corporation will initially produce light, medium, and heavy-duty commercial vehicles for the Indian volume market under a new brand name. The search is currently under way for a suitable production location. Negotiations are being conducted with three Indian states, and talks are expected to conclude shortly.

Once a decision is made, construction will begin on a plant that will start manufacturing commercial vehicles by the year 2010. The new company is aiming to achieve a localization rate of up to 80% in order to optimally utilize cost advantages. Production of commercial vehicles for export to other emerging markets will also be launched thereafter.

Daimler and the Hero Group will invest about Rs 4,400 crore (euros 700 million) in the Indo-German joint venture over the next five years, whereby Daimler will contribute euros 220 million (about Rs 1,386 crore) in the form of foreign direct investment.

Marc Llistosella, who directed the joint venture project from the Daimler side, will become CEO of the Daimler Hero Motor Corporation. Amit Chaturvedi, currently President, Strategy and Business Development at Hero Corporate Service Ltd. and project leader from the Hero Group, will serve as Co-CEO. Sunil Kant Munjal will be the chairman of the new company, which will be managed jointly by the two partners.

‘Today is a very significant day for Daimler Trucks and our Asia strategy,’ said Andreas Renschler, member of the Daimler AG Board of Management and head of Daimler Trucks. ‘In the Hero Group we've found an ideal partner, as the two companies perfectly complement one another in terms of the experience and expertise they contribute to the joint venture. The fact that the negotiations and the approval process ran so smoothly makes me very confident that the establishment of the new company will proceed just as rapidly,’ said Renschler.

Speaking on the occasion, Sunil Kant Munjal, Chairman, Hero Corporate Service Ltd. said, ‘We are very happy to partner with Daimler AG on this new joint venture for commercial vehicles. Daimler is the world's leading truck manufacturer with some very successful brands in its portfolio. As a Group, we already have experience in the Indian automobile sector, with a successfully running partnership with Honda of Japan. The Group’s experience of lean manufacturing, supply chain management, current asset management and its strong relationships in the market and the community would help in the new business as well.’