Daimler and The Hero Group enter into a JV

Published by admin on December 18th, 2007 | Tagged Business, News, Strategic Management

Daimler and Munjals enter into a Joint Venture:

Daimler and the Hero Group,of the Munjal Family have formed a JV for manufacturing light,medium,and heavy commercial vehicles.These commercial vehicles are going to be variants of Daimler Truck’s current products.The JV will target the domestic market and also the export Markets at later stage.

Both Companies will benefit from this:

Hero Group

This gives the Hero Group an opportunity to enter into the Commercial Vehicle Business Segment with the help of Daimler’s technical know how,latest design and technology.Hero group can also target the export markets.The $ 4 billion Hero group owns 26% stake in Hero Honda.Hero Honda is the largest two wheeler manufacturer in India.

Daimler Trucks

This will give Daimler a strong foundation for its long term plans since the Hero Group has managed excellent long term relations with Honda for so many years.Hero Group has good knowledge about the local markets and this will help Daimler with: distribution,cost reduction, developing vendor base,sourcing and entering new markets.

Here are some other JVs in the Indian Commercial vehicle segment:

-Volvo and Eicher JV:Volvo will invest $ 350 million in the JV.This will strengthen Volvo’s position in the Indian market.

-Ashok Leyland and Nissan:This JV will invest $500 million and will manufacture Light commercial vehicles.

-Mahindra & Mahindra and Navistar’s International Engine and Truck Corporation JV:To manufacture engines for medium and heavy commercial vehicles.

Currently,Tata has the largest market share of about 60% in the Commercial Vehicle segment.The worth of the Indian commercial vehicle market is around Rs 30000 crore.

Now the question is that what impact will these recent developments have on the Indian commercial vehicle market?

I feel that the future for the commercial vehicle market is very good because of the following reasons:

1.Increasing competition in the Commercial Vehicle segment will result in better products for the final consumer.

2.India is a growing economy.

3.The growth rate is of about 8% per year

4.Improving infrastructure will result in more demand for commercial vehicles.

5.Activities like Real Estate development,Building new roads,construction,mining etc are taking place.All this will increase the demand for commercial vehicles for transportation of materials and other inputs from one place to another.

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