The Indian government has approved Volvo’s plan to invest $275 million in a joint venture with Eicher Motors Ltd. to manufacture commercial vehicles and components.
In the joint venture, Volvo Eicher Commercial Vehicles Ltd, the Volvo will have 50 per cent stake as both direct and indirect holdings. Through the indirect route, Volvo will share 4.4 per cent.
According to an official, “The commercial vehicle business of Eicher Motors will be transferred to the joint venture company Eicher Motors India, the sales and distribution network of Volvo India will also be merged with the Joint Venture firm. The approval to bring in the FDI is subject to compliance with RBI and Sebi guidelines, besides subjected to approval of the relevant High Courts for the demerger of distribution business of Volvo India.”
The two partners had solemn the JV in the month of May. The agreement does not witness any union of brands or manufacturing services between the two enterprises. The joint venture will help Volvo to build up its dealership from existing 10 to 150. Likewise, Eicher would be able to develop its network globally with the help of Volvo.