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Chery and Jaguar Land Rover break ground for $1.75 billion JV

CHANGSHU, Jiangsu – Chery Automobile Co., Ltd. and Jaguar Land Rover (JLR) laid the foundation stone for their joint venture manufacturing facility here on November 18 just a month after receiving formal approval for the JV in October and eight months after the two companies had formally announced they would establish a JV.

The 50:50 JV will be called Chery Jaguar Land Rover Automotive Co., Ltd. and marks Chery’s first JV with a foreign automaker and also JLR’s first production facility outside the UK.

With a license to manufacture JLR vehicles and new models for a JV brand in China, the two companies will invest ¥10.9 billion ($1.75 billion) on the manufacturing plant to be completed in 2014, as well as a new R&D center and engine production facility. The investment represents the second largest ever in China for a vehicle JV, behind Dongfeng Motor Co., Ltd. and before Shanghai-GM, which have respective investments of $2 billion and $1.52 billion.

The JV will have a production capacity of 130,000 JLR and JV branded vehicles and 130,000 engines including Chery’s 2.0L/1.6L direct injection turbocharged engines and Jaguar’s 3.0L turbocharged engines.

Chen Anning, former head of Chery’s automobile research institute, will be chairman of the JV, while Chris Bryant, currently head of purchasing at JLR, will become the JV’s president. The head of purchasing, sales and product development at the JV will be appointed by JLR.

In a joint statement, Yin Tongyue, chairman and president of Chery, and Ralf Speth, CEO of JLR, said: “We are delighted to have reached this milestone, achieved thanks to the understanding and foresight of the Chinese authorities and we want to thank them for recognizing the potential of our joint venture in the fast-growing Chinese market. Together, we will now begin working in close collaboration on our partnership plans to harness the capabilities of our respective companies, to produce relevant, advanced models for Chinese consumers.”

China is now JLR’s third largest market and annual sales in 2011 increased by 60 percent to 42,000 units. In the first nine months of this year, JLR sold 53,616 vehicles (including nearly 48,000 Land Rover SUVs), up 80 percent.

Chery has led China in independent brand vehicle sales for the past 11 years and passenger vehicle export for 9 years in a row. In 2011, Chery recorded sales of 643,000 units, ranking No. 6 among passenger vehicle manufacturers in China. In the first 10 months of this year, it was the country’s No. 9 automaker in overall vehicle sales. Chery’s other JV with Israel Corp. – Qoros Automotive – is currently preparing for the debut and start of production of its first new model in 2013.

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