Jaguar Land Rover and Chery Automobile will now proceed with plans to build a 12.1 billion yuan ($1.92 billion, 1.47 billion euro) car venture in China after having received regulatory approval for this project, according to Chery. The agreement will help improve Chery’s profile. Chery, a mass volume player is hoping to get access to the profitable upscale segment that foreign brands dominate.
This also marks the most recent moves of Jaguar Land Rover to raise its appeal in the largest auto market in the world. Its luxury sedans and SUVs continue to be in high demand even as the overall car market gets slow. A Chery spokesman was asked to confirm a local media report that the project had received the go signal from the National Development and Reform Commission (NDRC).
He confirmed the project but he said that the official notice from NDRC hasn’t been received yet. The Chery-JLR venture, which will be based in Changshu city near Shanghai, has an annual capacity of 130,000 units. The partnership will produce Land Rover SUVs at the start. In the second phase, this will then be followed by Jaguars. In early 2012, JLR and Chery got the approval for the venture from the environment ministry in China.
Last March, JLR announced that the scope of the joint venture would include engine manufacturing as well as a new lineup of vehicles developed jointly with Chery. JLR, which is controlled by India's Tata Motors Ltd, had formerly examined joint venture deals with other Chinese partners such as Great Wall Motor Co Ltd. However, little headway was accomplished.
The Chery partnership will lead to a local production base in China, where global luxury markers such as BMW, Mercedes-Benz and Audi are taking advantage of the growing population of rich Chinese. Based on 2011 sales, China is JLR's third biggest market after the UK and U.S. During the same year, Chery was the No. 6 automaker in China.