Jaguar Land Rover agrees £240m plant for Brazil

VEHICLE manufacturer Jaguar Land Rover has officially confirmed one of the motor industry’s open secrets and announced it is go ahead with a multi-million pound scheme to build a new production plant in Brazil.

In doing so JLR becomes the first British carmaker to open a manufacturing facility in the South American country.

It finally put pen to paper on the landmark agreement after the conclusion of lengthy negotiations between the company and state authorities. The new plant, set to be built in the city of Itatiaia, part of the state of Rio de Janeiro, represents an investment of £240m by the Indian-owned business.

It also marks the latest global expansion by the vehicle manufacturer and it was fitting the announcement should come on the day when Chancellor George Osborne used his Autumn Statement to encourage further investment by British companies in the emerging markets.

All this week attention has been focused on events in China following the Prime Minister’s top level trade mission to the country, where he was accompanies by JLR chief executive Dr Ralf Speth as a representative of the British automotive industry.

The visit coincided with an official announcement by the company of a £4.5bn order to supply more than 100,000 vehicles for the Chinese market.

In Brazil, the agreement was signed by Phil Hodgkinson, Global Business Expansion Director of Jaguar Land Rover, and Sergio Cabral, State Governor of Rio de Janeiro.

Jaguar Land Rover’s planned expansion into Brazil is the next major step in the company’s strategy to increase its global manufacturing footprint and create additional capacity. The company said this new facility would play an important role in supporting the significant growth opportunity identified in Brazil and across other South American markets.  

So far there has been no confirmation on the type of vehicles likely to be produced. However, production capacity will stretch to 24,000 vehicles a year.

This is not huge by global standards and represents less than a quarter of the capacity of the plant currently being developed in China.

However, the aspirational nature of the Brazilians, buoyed by the double whammy of the next World Cup and Olympic Games, suggests there will be a ready-made market for the products.

Dr Speth said in a statement released by the company: “Brazil and the surrounding regions are very important. Customers there have an increasing appetite for highly capable premium products.

“This new programme will enable us to bring exciting new vehicles to them, with outstanding British design and engineering, creating a world-class Jaguar Land Rover facility incorporating leading premium manufacturing technologies.

“We have established excellent working relationships with the State of Rio de Janeiro, the City of Itatiaia and the Rio de Janeiro State Industrial Development Company and we look forward to attracting new customers to our business in this important market.”  

Construction of the new facility will commence in mid-2014 and it is anticipated the first vehicles will come off the assembly line in 2016, subject to the final approval of the plans from the Brazilian Federal Government under its Inovar-auto Programme.

Initially, the plant will employ almost 400 people but this is expected to almost double by the end of the decade. The new facility will also create additional jobs across the local supply chain network.

JLR selected the location of the plant following a detailed feasibility study. It identified Itatiaia because of its close proximity to the emerging Regional Automotive Zone, its excellent logistics links, access to the local supplier base and skilled workforce.

Sergio Cabral, Governor of Rio de Janeiro State said: “The choice of Rio de Janeiro to host the Jaguar Land Rover’s new facility is another historic achievement for our state. We offer perfect conditions to JLR to install its plant in Brazil, as we have an automotive hub in the South Fluminense region that concentrates qualified labour and important suppliers.

“It is a privilege to welcome this great group, with an estimated investment of up to R$750m and we are confident that this agreement will bring to Brazil extraordinary results.”

JLR has had a presence in the Brazilian market for more than 20 years. Its national sales company is based in Sao Paulo, employing almost 100 people. There are currently 35 dealers across Brazil with further expansion planned in the next year.

So far in 2013, JLR sales in Brazil have increased by more than 40% to 9,549 vehicles. The best-selling models in Brazil are Range Rover Evoque, Freelander and Discovery.