Hero pulls out of truck JV with Daimler citing adverse economic situation

15 April 2009

Hero Group, the industrial conglomerate controlled by the Munjal family, has abandoned a project to jointly assemble Mercedes-Benz trucks with Daimler of Germany in Chennai, Daimler said Wednesday. Left with 100 per cent of the project, Daimler said it would press ahead anyway.

A joint announcement by Hero and Daimler blamed the end of the joint venture on "the economic situation and the continuing weakness in demand in India" and said Hero Group would return the 40-per-cent stake it had earlier acquired from Daimler Trucks.

The statement quoted Hero Corporate Service chairman Sunil Kant Munjal saying, "Hero Group has decided to ... continue to grow its core business and not to pursue the commercial-vehicles business at this time." The move followed "amicable and mutual decisions between the partners, and we shall continue to explore doing business together in the future," he added in a statement.

New Delhi-based conglomerate Hero's business interests include Hero Honda Motors Ltd., the world's biggest motorcycle maker.

Daimler said that the truck venture would be renamed once Hero returns its stake. Plans call for it initially to produce light, medium and heavy-duty vehicles for the Indian market, with production for export to "other emerging regions" following later.

Production of trucks for export from India to other emerging regions would be delayed. About 280 people have already been employed at the Chennai plant, which is projected to turn out up to 70,000 trucks yearly for India's roads.