Daimler AG, the world's largest truckmaker, has entered into a joint venture with Hero Group that will invest Rs4,400 crore ($1.1 billion) to make commercial vehicles in India in the next five years.
The joint venture - Daimler Hero Motor Corporation - will start truck production under a new brand name by 2010, initially for the Indian market and later for exports as well, the two companies said in a joint statement.
Stuttgart, Germany-based Daimler and New Delhi-based Hero will make light, medium and heavy commercial vehicles from 2010, the statement added.
Daimler will hold a 60 per cent stake in the venture, with Hero holding the rest. The Hero Group will invest Rs900 crore ($225 million) and the rest of the investment will be financed through debt.
Hero Group managing director Sunil Kant Munjal will be the chairman of the joint venture.
Marc Llistosella of Daimler will be the chief executive officer and Hero Group's Amit Chaturvedi will serve as co-chief executive officer.
The government had last month approved the joint venture.
``This is one of the fastest-growing markets for commercial vehicles,'' Andreas Renschler, Daimler director and head of Daimler Trucks, said, adding, ``India is developing its transport infrastructure, including the highway development programme, which will in turn create demand for trucks.''
The joint venture plans to source 80 per cent of parts locally and the trucks will be designed and developed in India, Renschler said.
Daimler already makes Mercedes-Benz Actros trucks at its own plant in Pune, where the company also assembles Mercedes-Benz E-Class, C-Class and S-Class sedans.
Daimler has also a joint venture with Sutlej Motors Ltd. Which will start building luxury buses from the first quarter of the current fiscal.
The Daimler-Hero joint venture will compete with other foreign companies, including Volvo, the world's second-largest truckmaker, Munich-based MAN, Europe's third-biggest maker of trucks and buses and Navistar, the world's fourth-biggest truckmaker, which have all set up joint ventures or production bases in India.