Volvo and Eicher form a tie up for truck making in India
It is reported that world's No 2 truck maker Volvo plans to invest USD 350 million to expand in the fast growing Indian market through a joint venture with India's 3rd biggest truck maker Eicher Motors.
As per report, Volvo will buy 8.1% in Eicher Motors giving it 50% in the venture, which has not yet been named. Volvo will add its Indian truck sales business, valued at USD 75 million, and USD 275 million in cash to the venture. Eicher's commercial vehicle and components business will be transferred to the venture at an enterprise value of USD 506 million, and the two firms will combine their service and dealer networks for trucks in India. Volvo said that the agreement is expected to be completed before the middle of next year.
Mr Leif Johansson CEO of Volvo told a news conference that "What you really have to look at is the combination of buying into one of the world's quickest growing and largest markets. We came to the conclusion that the price is well justified given the growth opportunities and looking at the alternative costs and options that were there from our point of view."
Global truck makers are keen for a larger share of a market that is the world's 5th biggest and is forecast to expand with improving infrastructure and new emission and safety rules. Nissan Motor Co has firmed up ventures with Ashok Leyland for light trucks, engines and transmissions. Daimler, which recently began assembling some Actros trucks locally, is scheduled to announce a venture partner shortly.
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