VROOM TIME

New Delhi, Jan. 13: The joint venture between Daimler and the Hero group in commercial vehicles will first produce trucks suited for Indian roads.

“The details of the joint venture will be announced at the end of the first quarter of 2008. But to begin with, the group may want to manufacture trucks for the mass market,” sources said.

Initially, the two companies will produce light, medium and heavy commercial vehicles for the domestic market and later focus on exports.

It is learnt that the two partners are in talks with Argentum Motors for contract manufacturing. Argentum is promoted by Spice Jet managing director Ajay Singh and former Hyundai Motors India president B.V.R. Subbu

Earlier, Subbu had said, “(Argentum) has indicated its ability to contract manufacture and has approached a number of global manufacturers, including Daimler, to create facilities for contract assembly of vehicles.”

A Daimler India source said: “Our strategy is that truck production will not take place at Daimler’s new plant at Chakan in Pune, which is scheduled to kickstart in January next year.”

Though the shareholding pattern and investment details of the joint venture have not been announced, the two companies said the vehicles they wanted to produce would be variants of Daimler’s current truck portfolio.

The joint venture does not cover Daimler’s Actros trucks, which are made in Pune by subsidiary Daimler India Pvt Limited.

For its bus business, the company recently tied up with Punjab-based Sutlej Motors. This venture will begin producing bus bodies for Mercedes-Benz luxury coaches in Pune from the first quarter of 2008.

Sources said Daimler’s choice of the Hero group was influenced by the Indian outfit’s strong position in the component business, manufacturing experience in two-wheelers, long association with Japanese multinational Honda in the two-wheeler space and strong distribution network.

The country’s commercial vehicle market is estimated at Rs 30,000 crore.

The Hero-Daimler deal is the sixth joint venture in commercial vehicles involving Indian and foreign companies.

Nissan and Ashok Leyland had announced an alliance for light commercial vehicles in October last year. Eicher Motors Ltd tied up with Volvo last month.

In early 2007, Mahindra & Mahindra had formed a joint venture with the US-based International Engine and Truck Corporation to make heavy trucks.

Other alliances are between German truck maker MAN and Pune-based Force Motors for heavy and light commercial vehicles; and Tata Motors with Fiat’s sister company Iveco.