British off-road icon Land Rover plans to join the ranks of global automakers making vehicles in China by partnering with Chery Automobile Co Ltd in a joint venture. Local media reports said the partnership will be based in the Changshu Economic and Technological Development Area in Jiangsu province.
Both sides have reached agreement on the new venture and are now awaiting approval from the National Development and Reform Commission, China’s top economic planner, sources familiar with the issue told reporters.
Changshu, in the heart of the Yangtze River Delta, is only an hour’s drive from Shanghai. About 60 percent of China’s auto component makers are located in the city and neighboring areas.
In addition to a plant assembling Land Rovers, the NDRC is requiring the partnership to produce a new wholly owned brand, and have an engine factory and R&D center.
Jaguar cars, made by the same UK company, are not part of the current deal for local production in China.
According to the agreement between Chery and Jaguar Land Rover, the joint venture will have a planned production capacity of 50,000 units at its initial stage, overseas media reported.
The report cited Ralf Speth, Jaguar Land Rover CEO, saying Land Rover plans to invest 100 million pounds ($158 million) in the joint venture, which will have 5,000 employees.
The recent agreement requires the board chairman of the new joint venture to be appointed by Chery, while president will be selected from Jaguar Land Rover.
Chery, headquartered in Wuhu, Anhui province, already has production facilities in Changshu, a prosperous eastern city.
Chery and US-based Quantum LLC formed the Chery Quantum Auto Co – the domestic automaker’s first joint venture – in Changshu in 2007.
The partnership’s first car, the Quantum compact, will hit European and Chinese markets by late 2013, Chery said.
China became Jaguar Land Rover’s third-largest market in 2011 as it sold more than 42,000 vehicles in the country, a 61 percent increase from a year previous.
The majority were Land Rover vehicles, some 36,087 of the total, up 54 percent from 2010.
Its dealer network expanded to 113 authorized outlets by the end of the year.
China is expected to surpass the UK to become Land Rover’s second-largest market following the US this year, and become the biggest in 2013, Hu Bo, deputy executive president of Land Rover China said during an earlier interview.
The Chery-Land Rover partnership in Changshu will have Land Rover’s first manufacturing factory outside the UK, said sources familiar with the joint venture.
Chery is China’s biggest auto exporter, now making inroads in South America and Russia, but it has not entered US or Western European markets with its own-brand cars.
Last year, Chery and Fuji Heavy Industries, the parent of Subaru, agreed to make Subaru vehicles in Northeast China where major automakers including BMW and Volkswagen all have factories.
The agreement calls for their joint venture in Dalian, Liaoning province to have an initial annual production capacity of 50,000 units and 150,000 units at build out.
But local media are reporting the plan failed to win approval from the NDRC.
In 2011, Chery was the nation’s largest domestic automaker for the 11th consecutive year, selling 643,000 vehicles globally. It exported 160,200 cars, the most from China for the ninth consecutive year.