The entry of Tata’s Land Rover in China, which emerged as the world’s largest luxury car market with sales of 950,000 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 950,000 units, accounting for about 7% of the total market.
Land Rover is already popular in China and its sales have surged 60% 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%. It is far higher than the 5.19% growth rate of passenger vehicle sales and the total vehicle market's increase of 2.45%, 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 ($537.9 million) in registered capital.
The new venture, with an estimated investment of 17.5 billion yuan, ($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.
