Daimler AG of Germany and the Hero Group of India have reached an agreement on the establishment of Daimler Hero Motor Corporation Ltd, a joint venture to produce commercial vehicles in India.
Daimler Hero Motor is planned to produce light-, medium- and heavy-duty commercial vehicles under a new brand name from 2010. The companies are currently negotiating with three Indian states in search of a suitable site for the production plant. They will start constructing the plant as soon as the site is selected, they said.
Total investment in the new company is expected to reach more than 700 million euro (approximately ¥114.0 billion at ¥163 per euro) over the next five years. While Daimler and the Hero Group will provide 360 million euro (¥58.7 billion) together, Daimler will provide additional 220 million euro (¥35.9 billion) in the form of direct overseas investment.
To lower costs, the new plant will aim at a local procurement ratio of more than 80%. The plant will initially produce vehicles for the Indian domestic market, but later it is slated to start production of cars targeting other emerging markets.
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