BERLIN (AP) -- India's Hero Group is withdrawing from a truck-building joint venture with Daimler AG, the German company said Wednesday, citing the difficult economic situation and weak demand in India.
Daimler said Hero will focus on its core business and return its 40 percent stake in the joint venture, Daimler Hero Commercial Vehicles Ltd., to its Daimler Trucks unit. It gave no financial details.
It said that "the economic situation and the continuing weakness in demand in India" prompted the move, but stressed that Stuttgart-based Daimler remains committed to the Indian truck market.
"In light of the current economic downturn, declining market conditions and the group's strength, Hero Group has decided to maintain its focus and continue to grow its core business and not to pursue the commercial vehicles business at this time," said Sunil Kant Munjal, the chairman of Hero Corporate Service Ltd.
The move followed "amicable and mutual decisions between the partners, and we shall continue to explore doing business together in the future," he added in a statement.
New Delhi-based conglomerate Hero's business interests include Hero Honda Motors Ltd., India's biggest motorcycle maker.
Daimler said that the truck venture will be renamed once Hero returns its stake. Plans call for it initially to produce light, medium and heavy-duty vehicles for the Indian market, with production for export to "other emerging regions" following later.
Plans to make trucks at a new plant in Chennai are unaffected by Hero's withdrawal, Daimler said.
"I really regret the Hero Group's decision, but Daimler Trucks will nonetheless enter the truck volume market in India," board member Andreas Renschler said. He pointed to the Indian market's continuing "strategic significance for our growth in Asia."
Daimler Trucks will invest more than €700 million ($932 million) in India over the next four years, Daimler said. It added that it already has invested €24 million in equity capital.
Daimler is one of the world's biggest truck makers, with brands including Freightliner and Mitsubishi Fuso.
Daimler shares were down 0.2 percent at €24.63 in Frankfurt on a market that was slightly lower overall.