Chennai, India – Hero Group, an Indian business company, has backed out of a joint venture with Daimler AG that would see the German company distribute Daimler commercial vehicles in India.
The economic situation and continuing weakness in demand in India resulted in Hero Group focusing on its core business operations and returning to Daimler its 40 per cent stake in the two partners’ joint venture, Daimler Hero Commercial Vehicles Ltd.
“I really regret the Hero Group’s decision, but Daimler Trucks will nonetheless enter the truck volume market in India,” said Andreas Renshcler of Daimler Trucks and Daimler Buses. “Nothing has changed regarding our plans to manufacture trucks in Chennai. I’m counting on continued good relations with the Hero Group, whose expertise regarding the Indian market is very important for us.”
“In light of the current economic downturn, declining market conditions and the Group’s strength, Hero Group has decided to maintain its focus and continue to grow its core business and not to pursue the commercial vehicles business at this time,” said Sunil Kant Munjal, chairman of Hero Corporate Service Ltd. “The decision is a result of amicable and mutual decisions between the partners, and we shall continue to explore doing business together in the future.”
Daimler Trucks’ total investment in India will amount to more than €700 million over the next four years. The company has already invested €24 million as direct foreign investment.
Daimler’s growth in the commercial vehicle segment will focus on developing countries and emerging markets, especially the BRIC (Brazil, Russia, India and China) countries.
“The current economic situation does not change Daimler Trucks’ long-term strategy regarding the BRIC markets,” Renschler said. “A crucial aspect of Daimler Trucks’ involvement is the market’s strategic significance for our growth in Asia. For Daimler Trucks, India is more than just a market; it’s the key to a completely new generation of products. However, we have to realize that the economic crisis does not pass India without any impact. But this gives us more time since Daimler Trucks will not position trucks in an economic downturn. But nevertheless, nothing changes in our plans in India.”
After the acquisition of the Hero shares, the company will be renamed. The new company will initially produce light-, medium- and heavy-duty commercial vehicles for the Indian volume market, with production of trucks for export to other emerging regions launched at a later date. A new production plant is already under construction in Chennai for this purpose.