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New Delhi, Dec. 14 In a third major joint venture that the last six months have seen on the commercial vehicles front, the German truck maker Daimler on Friday announced a joint venture with the Hero Group for the business. This would also be the second joint venture in the week with Eicher Motors Ltd tying up with the Swedish automotive giant, Volvo. In August this year, Ashok Leyland tied up with the Japanese major Nissan for light commercial vehicles.

The joint venture between the Hero Group and Daimler Trucks would include manufacturing of light, medium and heavy commercial vehicles for which a proposal will be submitted to the Foreign Investment Promotion Board.

According to a joint statement released from both the group companies, initially the joint venture would focus on the domestic market and later exports. The companies said that the vehicles they seek to produce will be variants of Daimler Trucks’ current product portfolio tailored for the Indian market.

“The partnership with Daimler Trucks marks our foray into the four-wheeler space. This initiative is in pursuance of the Hero Group’s long-term vision and strategy to have a diversified portfolio of high-growth businesses by building on its core competencies and expertise. This partnership gives us the opportunity to bring in Daimler Trucks’ world class products and technology, and combine it with our own strengths and create winning products for Indian and other global customers,” said Mr Sunil Kant Munjal, Chairman, Hero Corporate Service Ltd, in a press statement.

Currently, Daimler already has a subsidiary, Daimler India Pvt Ltd that manufactures buses and trucks. For its buses business, the company recently tied up with Punjab-based Satluj Motors. The company, however, said that the local manufacturing operations for special applications of Mercedes-Benz trucks and bus bodies will continue for the time being at DaimlerChrysler India that currently manufactures Mercedes-Benz Actros trucks in Pune.

“The decision to form this joint venture in India marks a milestone in Daimler Trucks’ overall strategy to participate in the fast-growing emerging markets. In Hero, we have found an excellent, experienced partner with a long tradition of manufacturing and know-how of the local industry. Hero has a proven track record of managing long-term relationships with global and domestic partners,” said Mr Andreas Renschler, Member of the Daimler Board of Management and Head of Daimler Trucks.

Daimler Trucks is a division of Daimler AG and the world’s largest manufacturer of commercial vehicles. With its five major truck brands – Mercedes-Benz, Freightliner, Sterling, Western Star and Mitsubishi Fuso – Daimler Trucks sold over 516,000 trucks worldwide and generated revenues of € 31.8 billion in 2006.

Earlier this week, Volvo estimated the market size for light and medium commercial vehicles (5-12 ton) at about 80,000 units and of heavy vehicles (above 16 tons ) at above 2 lakh units per annum.

Currently, Tata Motors commands the maximum market share in the heavy vehicles segment, at around 67.7 per cent followed by Ashok Leyland, Eicher, and Volvo. Even the light commercial vehicles segment is dominated by Tata Motors that has a majority market share of 57 per cent in the segment. It is followed by Eicher Motors that commands 27 per cent of the market.

Commenting on whether the slew of joint ventures would eat into the share of existing players like Tata Motors or Ashok Leyland, Mr Mahantesh Sabarad, an auto analyst at Prabhudas Liladhar Brokerage firm said, “Both Tata Motors and Ashok Leyland are well entrenched in the commercial vehicles market, which requires a lot of ground work and support in terms of distribution and network. Moreover, Volvo, Eicher and Daimler have been present in the Indian market. But they have not affected the share of these players”.

However, he pointed out that Daimler is a recognised name and all it required was distribution and a sourcing base which it would get from the collaboration with the Hero Group.

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