Daimler Hero CV to invest Rs 3000 cr in TN

This new player in the Indian commercial vehicle market plans to roll out 70,000 vehicles a year, in the medium and heavy duty segments. The plant will be set up at the SIPCOT Industrial Park, Oragadam over 400 acres.

The heavy and medium duty commercial vehicle business is currently dominated by Tata Motors and Hinduja Group company Ashok Leyland followed by other players like Mahindra & Mahindra, Eicher Motors and Force Motors.

The signing of MoU between the investors and the state was witnessed by state Chief Minister M Karunanidhi , senior government officials and representatives of Daimler AG and Hero Group.

Talking to the media on the sidelines of the MoU signing event, Sunil Kant Munjal, chairman of Hero Corporate Services said that the new plant that is expected to start commercial production by 2010 will directly employ 3000 people. Several parts supplying ancillary units too are expected to come in the vicinity of the plant taking the total employment opportunity to 20,000.

Currently, Daimler India imports its Actros range of trucks in the CKD form and assembles them in Ludhiana, Punjab. This operation will cease to exist once the new factory commences production in Tamil Nadu.

While Daimler AG has been part of the Indian commercial vehicle markets for several decades starting with a relationship with Tata Group, it is a new line of business for Hero Group, which has historically been associated with bicycles and motorised two wheelers.

Hero Group in fact with nearly 50 per cent market share in the motorcycle market is a dominant player in this segment.

Senior state officials said that with this MoU in place and with Ashok Leyland Nissan setting up their new small truck factory in Tamil Nadu, the state is set to emerge as the largest manufacturer of commercial vehicles in the country.

The domestic commercial vehicles market saw sales of 487,000 units in 2007-08 and another 60,000 vehicles being exported. Tata Motors has a commanding presence of 300,000 vehicles in that year which translates to 60 per cent market share. Ashok Leyland has 16 per cent share in this market.

Tata Motors dominance in the market is in part contributed by its large volume mini truck Tata Ace. The commercial vehicle market grew by 4 per cent in 2007-08, with leaders like Tata Motors reporting flat growth in the year while Ashok Leyland's sales slipped by 1.3 per cent in domestic sales volumes. The strongest growth was reported by a relatively small player Force Motors which sold 11,000 vehicles and reported a volume growth of 50 per cent last year.