Abhay Firodia-led Force Motors is exiting its 50:50 heavy commercial vehicle manufacturing joint venture MAN Force Trucks to its German partner MAN Truck and Bus AG for €150 million ($202 million or Rs 1,050 crore).
Force Motors had started a project for new-generation commercial vehicles in 2003 and sourced technology for engines, cabs and axles from MAN and gearboxes from ZF. In 2006, MAN picked 30 per cent stake in the venture that came under MAN Force Trucks. MAN raised its holding in the JV to 50 per cent three years ago.
The company manufactures long haul trucks, tippers, tractor-trailers, transit concrete mixer and multi-axle vehicles. MAN Force has a manufacturing facility at Pithampur and its trucks are exported to countries like Sri Lanka, Indonesia and certain African nations.
The deal will mean Force Motors pulling out of the heavy commercial vehicle market and focusing on other segments of commercial vehicles and utility vehicles.
Besides its JV with MAN, Force Motors is also into light and medium commercial vehicles manufacturing besides other products like tractors and multi-utility vehicles.
Pune-based Force Motors has been looking to grab a piece of passenger vehicle market with the launch of sports utility vehicles (SUV) in the next few months. The company has unveiled a new logo and announced that it will soon enter the SUV market with Force One.
Force Motors shares last traded at Rs 501 per unit, up 0.2 per cent on the BSE in a weak Mumbai market on Monday.
This deal comes as yet another break-up of a cross-border automobiles joint venture in India. While the Munjals of the Hero Group recently bought out their decades-old Japanese partner Honda in their two-wheeler venture, Daimler sold off its minority stake in Tata Motors for €300 million in March last year to build up its own India business.
Two years ago, Daimler set up its own firm Daimler India Commercial Vehicles, which is now building a new plant in Chennai. Starting in 2012, the new plant will initially produce light, medium and heavy-duty commercial vehicles for the Indian volume market under a new brand name. The production of trucks for export to other emerging markets will follow at a later date.
Key commercial vehicle makers in the country include Tata Motors, Ashok Leyland and Eicher Motors among others.
