Daimler to invest $1 billion at truck plant in Chennai

07 July 2008

Frankfurt: Daimler AG has selected Chennai in the southern Indian state of Tamil Nadu as its site for a new truck plant in India, in partnership with joint venture partner and India's leading two wheeler manufacturer, Hero Group. The joint venture will assemble 70,000 trucks per annum initially, and an investment of over €700 million, which is a little over $1 billion over the coming five years.

This was disclosed by Daimler in a statement today, in which it said that the key factors leading to the choice of the Chennai site were proximity to important suppliers, the city's infrastructure, transportation connections and the large number of well-qualified skilled workers in the region.

The joint venture, Daimler Hero Commercial Vehicles, will start produce the trucks in 2010, under a new brand for the Indian market, and will subsequently export them as well. Chennai is India's fourth largest metro city, and is currently tied with Pune in the western Indian state of Maharashtra for the coveted position of India's automotive capital.

Amongst other global auto majors who have based their operations in Chennai are BMW AG Ford Motor Co, and Hyundai Motor Co. French auto group Renault SA along with alliance partner Nissan Motor Co too are building a new plant there. Amongst Indian commercial vehicle manufacturers, Ashok Leyland assembles vehicles in Chennai.

Daimler Hero Commercial Vehicles signed a Memorandum of Understanding (MoU) with the Tamil Nadu government today. On 21 April, Daimler and Hero Group had agreed to invest €700 million in the venture over the next five years.

The company said it Chennai plant would eventually export to markets with similar product requirements as that of the Indian market, and is looking at achieving a localisation rate of up to 80 per cent to optimally utilise cost advantages.