China gives green light to JLR plant
Chinese authorities have given Jaguar Land Rover and its new joint venture partner Chery the green light to launch a new production facility in the country.
The country'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 which will see JLR vehicles produced from a new factory the city of Changshu, near Shanghai.
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.
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.
The decline in traditional European markets due to the upheaval in the Eurozone has dented recent sales so a new outlet will be doubly welcome for the firm’s Indian parent Tata Motors.
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.
Land Rover is likely to benefit most as the Chinese SUV market is the fastest growing automotive segment in the country with sales up 24.46% to 1, 64,300 vehicles.
By having a domestic production facility the company will be able to overcome these import duties and its vehicles – already in high demand – are expected to be even more popular.
In a statement, the JV partners said: “Both Jaguar Land Rover and Chery welcome regulatory clearance for the equal partnership company and will confirm details of its ambitious plan for the joint venture in China at a press conference, after receipt of formal written confirmation.
"We will now follow the official process for incorporation of the JV; neither party is in a position to disclose any additional information or financial terms at this time."
The new plant is expected to have a capacity of around 100,000 vehicles a year, which may increase subject to demand.
It is expected to produce both Jaguar and Land Rover vehicles together with new joint venture branded vehicles. It is scheduled to be operational in 2014.
Chery is expected to benefit considerably from the partnership. It has recently seen a sales drop and will be looking for an upturn.