China approves JLR joint venture

AS widely anticipated, Jaguar Land Rover is to make vehicles in China for the first time after Beijing approved a £1bn joint venture.

The West Midlands carmaker has agreed a deal with Chery Automobile and will build a plant near Shanghai, which is due to open in 2015.

Sales of JLR models in China have risen by 80% so far this year. The new plant is expected to have a capacity of around 100,000 vehicles a year, which may increase subject to demand.

The company, owned by India’s Tata Motors, began talks with Chery months ago, but had been awaiting approval.

China’s National Development and Reform Commission gave its full backing to the proposal, which comes six months after the two manufacturers agreed a £1.2bn partnership deal.

The permission has been fast-tracked by Chinese standards; normally these matters would take around 12 months to clear but all parties are thought to have recognised the importance of the plant to the Chinese economy.

A joint statement released by the Chinese and British companies said: “We are delighted to have reached this milestone, achieved thanks to the understanding and foresight of the Chinese authorities and we want to thank them for recognising the potential of our joint venture in the fast-growing Chinese market.

“Together, we will now begin working in close collaboration on our partnership plans to harness the capabilities of our respective companies, to produce relevant, advanced models for Chinese consumers.”

JLR has not said officially which model would be built at the factory, although the company has said in the past that is likely to be either the Land Rover Freelander or Evoque.

The move is vitally important for JLR. It has seen unparalleled success during the last 18 months, mounting a major assault on global markets aided by its best-selling Evoque model.

China is now the company’s third largest market – even with the massive import duties which can double the price of its vehicles by comparison to the UK. Sales reached 53,000 units in the first nine months of the year, up 80% on the previous year, according to the China Association of Automobile Manufacturers.

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