June 26, 2007 -- India's largest truck and bus maker Tata Motors has given a no objection certificate to the world's largest commercial vehicle (CV) player DaimlerChrysler to manufacture CVs in India. This would allow the German company to roll out Mercedes-Benz branded CVs in India. This would also mean intense competition at the top end of the CV and luxury bus market in the country.
The green signal from Tata Motors follows a long-standing relationship between the two. DaimlerChrysler India holds 6.64% in Tata Motors and according to government guidelines it required a no objection certificate from the Indian company before it could enter the CV segment as a competitor.
DaimlerChrysler currently imports Mercedes-Benz trucks. But with the new proposal, it would start producing CVs locally. DaimlerChrysler would initially make the vehicles at its manufacturing facility at Pune. Production would later be shifted to its new plant at Chakan, near Pune. DaimlerChrysler has acquired 100 acre at Chakan Industrial Park. Daimler is also expected to get into the production of luxury coaches and buses. In addition, Daimler would develop bus bodies at its India unit.
Tatas had entered into a collaboration with German auto maker Daimler Benz in 1954 for medium CVs. When Daimler started its manufacturing activity for Mercedes-Benz cars in India in 1994, it began as a 51:49 joint venture between Daimler and Tata Motors, which was then known as Telco. Over time, Daimler increased its holding in the JV and in 2001 it bought out the entire equity held by the Tatas in the venture. This wholly-owned unit, however, still holds 6.64% stake in Tata Motors.
It remains to be seen how soon DaimlerChrysler India commences domestic production. The CV segment is currently in the midst of a slowdown and the first two first months of FY08 have seen a 6% decline in sales in the medium and heavy CV category. Market leader Tata Motors has recently cut production due to the slowdown.
DaimlerChrysler is the world's No. 1 CV company with about 15% and 17% global market share of the medium-heavy duty truck and bus segment, respectively. In 2006, it sold over 536,000 trucks and 36,000 buses. The trucks group had revenues of e31.9 billion in 2006 with Asia being the second largest market accounting for 27% of sales. Its main global production facilities are spread across North America, western Europe, Latin America (excluding Mexico), Japan and Turkey. It operates under brands such as Mercedes-Benz, Freightliner, Sterling, Western Star, Thomas Built Buses and Mitsubishi Fuso. The $200-billion auto giant is currently in a global business restructuring phase where it is selling out the Chrysler division to a private equity group.
Source: The Economic Times
Source: Factiva
