FRANKFURT, Germany (AP) -- Daimler AG and India's Hero Group said Monday they have selected the Indian city of Chennai for a commercial vehicle plant that will produce around 70,000 trucks per year starting in 2010.
Construction of the plant involves an investment of some 700 million euros ($1.1 billion) over the next five years, the companies said in a statement.
"The key factors leading to the choice of the Chennai site for the future production plant were proximity to important suppliers, city's infrastructure, transportation connections and the large number of well-qualified skilled workers in the region," the companies said.
The joint venture will produce light-, medium- and heavy-duty commercial vehicles for the Indian market to start, but has not ruled out eventually exporting them to other emerging markets.
Daimler is Europe's biggest truck maker with brands including Freightliner, Sterling and Mitsubishi Fuso. Last year, its truck unit posted revenue of 28.5 billion euros with 467,667 trucks sold worldwide.
Hero Group is an Indian conglomerate founded more than 50 years ago with annual sales of $4 billion.
It operates Hero Honda Motors Ltd., a joint venture with Japan's Honda Motor Co., which has built more than 20 million motorcycles for the Indian market.
Daimler shares rose 0.4 percent to 38.56 euros ($60.43) in afternoon trading Monday in Frankfurt.