Tata JV in China to heat up competition in luxury car mkt

JLR finalise Chery Automobile as partner to form an equal joint venture in China.

Written by Agencies | Beijing | Published: March 22, 2012 12:17:43 pm

The entry of Tata’s Land Rover in China,which emerged as the world’s largest luxury car market with sales of 9.50 lakh high-end vehicles last year,will heat up the competition in this segment here,analysts said.

Tata Motors-owned,UK-based Jaguar Land Rover (JLR) said yesterday that it has finalised Chery Automobile Company as partner to form an equal joint venture in China that will produce both JLR and the JV-branded vehicles.

The JV will also manufacture engines and set up a research and development centre in China.

“JLR and Chery Automobile Company Ltd have reached agreement on a proposed joint venture in China. The agreement follows extensive talks between JLR and Chery on establishing an equal partnership company,” JLR said in a statement.

In 2011,luxury vehicle sales maintained robust growth in China despite a slowing overall market,with combined sales of 9.50 lakh units,accounting for about seven per cent of the total market.

Land Rover is already popular in China and its sales have surged 60 per cent to 42,000 units.

“Choosing China as its first production site outside the United Kingdom is a reasonable consideration due to the booming luxury vehicle sector in recent years,Chinese automobile analysts said.

“The sector will maintain its momentum in the coming years,” Jia Xinguang,an independent auto analyst based in Beijing told state run China Daily today.

“It also indicates China’s strategic importance in Jaguar Land Rover’s long-term global development,” he said.

Luxury vehicle sales average year-on-year growth of 38 per cent. It is far higher than the 5.19 per cent growth rate of passenger vehicle sales and the total vehicle market’s increase of 2.45 per cent,Xinguang said.

Chinese media reported earlier this month that the JV will be set up in Changshu,Jiangsu province,a city about 100 km northwest of Shanghai.

The location will be next to the production site of Qoros Auto Co Ltd,a 50-50 joint venture established by Chery and Israel Corp in December 2007,using 3.4 billion yuan (USD 537.9 million) in registered capital.

The new venture,with an estimated investment of 17.5 billion yuan,(USD 2.7 billion) will start vehicle production in July 2014,reports said.

Wholly-owned by India’s Tata Motors,JLR sells vehicles in more than 170 countries.

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