Jaguar Land Rover Sign JV Deal With Chinese Firm To Make Autos

By Oliver Tree | March 21 2012 3:39 PM

Jaguar Land Rover has agreed to form a joint venture with Chery Automobile Co., a move that will see the British brand dramatically increase its presence in China.

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The C-X16 will be available for around £50,000 later this year. In recent years, the Chinese government has focused on consolidating the many existing companies into stronger national brands better able to cope with the country’s economic slowdown.

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It is hoped the joint venture will boost flagging sales for JLR and parent company TATA, as the luxury carmaker suffers dwindling sales in its traditional European and U.S. markets.

The Chinese car market -- the largest in the world -- has seen enormous growth in the high-end automobile sector, while in the west high gas prices and faltering economies have led to a sharp downturn in luxury purchases.

According to Fox Business, The Chinese market is of growing importance to JLR. In 2011, China accounted for 19 percent of the company's sales, up from just 1 percent in 2005. It is now the company's third largest market .

In a statement, JLS said the venture with Chery was an equal partnership company, with plans for the manufacture of JLR- and JV-branded vehicles; establishment of a research and development facility; engine manufacture; and sale of vehicles produced by the JV company.

Dr. Ralf Speth, JLR's Chief Executive Officer, and Yin Tongyao, Chairman and Chief Executive Officer of Chery Automobile Company Ltd, added in a joint statement: Working together on this proposed joint venture is an exciting prospect for both JLR and Chery.

Demand for Jaguar and Land Rover vehicles continues to increase significantly inChinaand we believe that JLR and Chery can jointly realise the potential of these iconic brands in the world's largest car market.

In January, Seth said JLR may spend up to £100 million on a new factory in China.

Our ambition, the pair added, is to leverage the respective strengths of our two businesses -- in research and development; technological innovation; manufacturing excellence and local consumer knowledge -- to offer Chinese customers the most advanced, highly efficient products featuring the very latest technologies.

The statement added the exact terms and conditions of the deal were not being released at this time.

According to analysts, the JLR-Chery deal may run into some regulatory issues.

In recent years, the Chinese government has focused on consolidating the many existing companies into stronger national brands in order to better cope with the country's economic slowdown.

The legislative shift has resulted in a stagnation of approvals for new foreign-domestic alliances.