Daimler India Commercial Vehicles inaugurated its 400-acre facility at Oragadam, near Chennai, to manufacture the BharatBenz range of trucks.
The Tamil Nadu Chief Minister, Ms J. Jayalalithaa, inaugurated the plant.
The total investment on the facility will be Rs 4,400 crore. The initial production capacity at the plant is 36,000 units a year, which can be ramped up to over 70,000 units.
The Oragadam plant, by Daimler India, a subsidiary of Daimler AG, is one of Daimler's 27 truck plants globally. It will produce 17 variants of light and heavy duty trucks in the 7-49 tonnes range for use in the construction and mining sectors, and on highways.
The German company expects to roll out BharatBenz heavy duty trucks by September.
The priority will be the Indian volume market to start with. Exports to Far East, West Asia and Africa could be looked into next year.
The plant will adopt a just-in sequence methodology — getting parts assembled just ahead of the production sequence in the assembly line. This is a step ahead of the famed just-in time principle, said a company official.
The plant also has an engine assembly capacity of 24,000 engines for heavy duty vehicles. Engines for the light duty trucks will be sourced from Pitampur, Madhya Pradesh.
Apart from the BharatBenz range, Daimler will also shift production of its Actros range of premium heavy duty trucks manufacturing operations from its Pune plant, which will now focus on Benz cars, as part of its consolidation strategy. The Oragadam plant is Daimler's third largest outside Germany. Daimler has invested Rs 2,500 crore so far on the plant.
Daimler will tie-up with 70 dealers at the time of rollout; it plans to have 110 dealerships in place in 18 months.
About 85 per cent of the truck parts will be locally sourced for the first few trucks to be rolled out of the plant. The company has tied up with 450 suppliers mostly from the Chennai region.
Mr Marc Llistosella, CEO and MD, Daimler India Commercial Vehicles, said, “We are targeting 90 per cent localisation by 2015 and 50 per cent of this will come from Tamil Nadu.”
According to Mr Andreas Renschler, Daimler Board of Management member responsible for trucks and buses, the trucks will be tailor made for the local markets. They need 10 per cent less diesel than trucks in the Indian market today, he said. These trucks will be priced higher by a “single digit per cent” than the conventional trucks.
Apart from the manufacturing plant, the facility also houses a research and development centre and a test track. There are 1,400 people working at the plant now.
Ms Jayalalithaa said that the State Government has approved an attractive package of support for Daimler. Daimler's presence will strengthen Chennai's reputation as the Detroit of India, she added.
Light vehicle segment
On whether Daimler could look at the light commercial vehicle segment, Dr Dieter Zetsche, Chairman of the Board of Management, Daimler, said it is not viable from a profitability point of view.
Mr Zetsche did not rule out the possibility for Daimler to do commercial vehicles in India together with the Renault-Nissan alliance, although there are no immediate plans. Recently, the global alliance made an announcement to launch a family van.