Jaguar Land Rover and Chery Automobile Co. have sealed with finality a joint venture agreement to manufacture and sell vehicles in China. Jaguar signed the joint venture deal in order to further expand its presence in China, where the demand for luxury cools remains high even after consumer spending had cooled down the Chinese appetite for cars.
The company sees China as the fastest-growing market for cars and sports utility vehicles. The 17.5 billion yuan ($2.78 billion) Jaguar Land Rover-Chery Automobile joint venture agreement, however, still has to receive approval from authorities in eastern China, two sources privy to the matter told Reuters.
Once the joint venture pushes through, it will produce Jaguar Land Rover- and JV-branded vehicles and engines. The joint venture will also build a research and development facility, and will sell vehicles built by the entity. According to a joint statement released by Jaguar Land Rover and Chery, the companies will look to leverage research and development, technology and manufacturing knowledge across the joint venture.
According to Vineet Hetamasaria, auto analyst at PINC Research, it will take some time before the results of the joint venture could be seen. After sealing the agreement, Jaguar Land Rover and Chery Automobile will now have to follow the official procedures in creating a joint in China.
Chery and Fuji Heavy Industries Ltd. have a pending joint venture application with Chinese authorities. Chery and the Subaru maker submitted the deal for approval in 2011 and has yet to receive a decision from Chinese authorities over the matter.