MUMBAI, India (AP) — Germany's Daimler inaugurated a new factory in the south Indian auto hub of Chennai on Wednesday, the centerpiece of its 44 billion rupee ($850 million) investment in India.
The is the first time Daimler, which also makes Mercedes Benz cars, will be building trucks designed for the Indian market in India, bringing it into competition with Tata Motors, India's top commercial vehicle manufacturer.
The company says the factory will start commercial vehicle production in the third quarter of this year, with an initial capacity of 36,000 vehicles. The maximum capacity of the Chennai factory is more than 70,000 vehicles.
"It is the only Daimler plant in the world that houses products which combine Indian engineering with German and Japanese DNA under a single roof. This way, we are optimally positioning ourselves for one of the world's strongest and fastest-growing truck markets," Daimler chairman Dieter Zetsche said in a statement.
The factory employs 1,400 people and will allow Daimler to build trucks using 85 percent local components, crucial for containing costs.
Daimler is also investing in research and development and has built a test track, with a rough road ring designed to mimic India's grueling roads. The company said that by 2014 it will produce 17 trucks in India, the world's third-largest commercial vehicle market.
Its line of BharatBenz trucks is tailored to appeal to cost-conscious Indian consumers.
Marc Lilstosella, chief executive officer of Daimler India Commercial Vehicles, said the factory will start exporting as early as next year. The first target markets are Asia and Africa.
Daimler plans to move assembly of its premium heavy truck Actros to Chennai from its factory in Pune, in the Indian state of Maharashtra, where it also assembles Mercedes Benz cars.