Chery Jaguar Land Rover Automotive Company Ltd a 50:50 joint venture between auto giants in China and India, are setting up a new manufacturing facility in Changshu, 100 kms west of Shanghai with an investment of 10.9 billion RMB or 1 billion pounds (US$1.3 billion or Rs. 70 billion). The two companies also plan to build a research and development facility and engine production plant as part of the venture,complete work on the facility in 2014. JLR already has a plant in the Indian city of Pune, where it assembles Land Rover’s Freelander SUV.
It is the first time JLRwill make cars outside the UK although JLR competitors Volkswagen AG and Mercedes-Benz have already started manufacturing in China. The facility will also enable Jaguar Land Rover to set more realistic prices to their cars as high import duties have impacted sales. Furthermore, Jaguar Land Rover will be able to customise cars specifically for the Chinese market, an adjustment they were unable to tailor-make back in the UK. Currently, JLR has a business unit in China that imports and sells the company’s vehicles.
Spurred by the high demand for luxury cars in China, Jaguar Land Rover sales rose 80 percent in the first 10 months of the current calendar year following a 60 percent rise in 2011. In 2005, sales in China accounted for 1 per cent of combined Jaguar and Land Rover sales. It is now one of Jaguar Land Rover’s main markets and is still growing. The exponential growth has lured Tata Motors to tie up with Chery, China’s largest automaker to manufacture the cars domestically.
Marketed best as the car James Bond rode, the quintessentially British firm supplied more than 75 vehicles for the latest Bond flick Skyfall, including the opening chase sequence where Bond is shot while slugging it out on top of a moving train. While the Tata’s haven’t expressed which models of JLR will be manufactured in China, strong rumours expect it to be the Land Rover Freelander or Evoque. Analysts also expect the JV to manufacture cars only for the Chinese market, which may or may not be marketed under the JLR brand.
Recently, the China Association of Automobile Manufacturers predicted the Chinese market would have an annual growth rate of at least 7 percent in coming years, the same as the country’s economic growth targets for 2011-2015. Between April and September, JLR’s retail vehicle sales in China totaled 35,617 vehicles, accounting for the biggest chunk — 21percent — of its world-wide sales. The U.K. was a close second, accounting for 19 percent of its sales.
The company is Tata Motors’ biggest moneymaker, and the reason the Indian company has been able to offset a slowdown in demand in the country’s automobile industry. Tata Motors, India’s biggest auto maker by sales, bought JLR from Ford Motor Co. in 2008 for US$2.3 billion.