By Costas Pitas and Tatiana Jancarikova
LONDON/BRATISLAVA (Reuters) - Luxury carmaker Jaguar Land Rover has signed a letter of intent to build a new car plant in Slovakia, a further expansion away from its British manufacturing base as it seeks to boost sales worldwide.
The brand, owned by India's Tata Group since 2008, said it was carrying out a feasibility study for a factory in the western Slovak town of Nitra with the aim of reaching an annual output of up to 300,000 cars over the decade from 2018 when the plant could start production.
A final decision will be made later this year.
Slovak Finance Minister Peter Kazimir hailed the decision, saying it was helped by the fact his country is a member of the euro zone, unlike some central European neighbours.
A trade union source told Reuters earlier in the process that Jaguar Land Rover (JLR) was deciding between the Czech Republic, Hungary, Poland and Slovakia, with only the latter a member of the euro.
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Poland said on Tuesday that Slovakia had offered high state subsidies which it was not prepared to match.
Slovakia's economy ministry was not immediately available to comment but a ministry source told Reuters the country would offer up to the maximum subsidy possible under European Union rules.
JLR said it had turned down other locations in Europe, the United States and Mexico in favour of Nitra because of a strong supply chain and good infrastructure.
It said the facility would play a major role in increasing the number of lightweight aluminium models produced.
The plant would also help reduce JLR's reliance on Britain, where it had to offer an improved pay and pensions deal last year to avoid strike action.
The average hourly labour cost in Slovakia is below 10 euros, less than half that of Britain, according to Eurostat figures.
Slovakia has already attracted Germany's Volkswagen (VW) , South Korea's Kia and France's PSA Peugeot Citroen , which together build hundreds of thousands of cars in the country every year.
Nitra is close to the VW and Peugeot plants in a cluster of automotive suppliers, and the region is connected to European markets by rail and highways.
JLR has steadily increased the number of models it builds outside Britain, opening its first overseas manufacturing plant in China in October.
As part of plans to bring production closer to major markets, the firm will open a plant in Brazil in 2016. It also signed a manufacturing partnership in July to build models in the Austrian city of Graz.
The firm has benefited from significant investment since it was bought by Tata. Its 2014/15 pretax profits rose to 2.61 billion pounds, double the amount four years ago.
(Additional reporting by Jan Lopatka in Prague and Pawel Sobczak and Marcin Goettig in Warsaw; Writing by Costas Pitas; Editing by Jane Merriman and Mark Potter)