Indian auto major Mahindra & Mahindra has set up a joint venture with American manufacturer Navistar International to produce and market light, medium and heavy commercial vehicles for Indian and export markets.
The new venture will be known as Mahindra International, the companies said in a statement in New York on Monday.
Mahindra & Mahindra will have 51 per cent ownership in the joint venture with Navistar accounting for 49 per cent and the combined investments of the two companies will be more than $80 million over a two-to-three year period, it said.
Daniel C Ustian, Navistar chairman, ceo and president, said the joint venture gives the company "the opportunity to participate in the economic growth of India and the surrounding region, working with a partner of proven capabilities and reputation."
"Equally important to our growth strategy is the opportunity to utilise India as a significant supply base for global sourcing of components and materials. This approach provides both inherent cost savings and the advantages of scale," he said.
Mahindra International is expected to start production of commercial trucks and buses in 2007 in an updated Mahindra facility, the statement said.
Anand G Mahindra, vice-chairman and managing director of Mahindra & Mahindra said: "This joint venture will help us strengthen our competencies across our core areas of product development, engineering and manufacturing."
"While enabling the widening of our participation in the auto sector in India, our relationship with Navistar will also suppoert our aspirations to be a global player," he added.
The state-of-the-art Mahindra factory will include cab assembly, vehicle assembly and a paint shop. The vehicles will have 90 per cent local content from the start due to strong availability of quality parts and materials from Indian suppliers, the statement said.
Besides marketing the vehicles in India, the venture is also expected to export vehicles to many other parts of the world through its own distribution channel, as well as Navistar and M&M's overseas networks, the companies said.
A development centre has already been opened in India and it currently employs about 100 engineers but their number is expected to grow to 300 as work progresses. Engineering has begun for the vehicles to be introduced in 2007.
Navistar International is a leading manufacturer of truck, school bus and mid-range diesel engines in North America.
