China's Chery Automobile Co and premium carmaker Jaguar Land Rover have agreed to form a joint venture in China, which will lay the road for the British nameplate to boost its presence in the world's largest auto market.
Chery seeks to use the deal to leverage the foreign partnership to help it boost its brand while Jaguar Land Rover aims to compete with Mercedes-Benz and Audi for a bigger slice of China's rapidly growing luxury car market.
The equally-owned joint venture will produce and sell Jaguar and Land Rover vehicles in China as well as roll out Chery models, according to a joint statement released yesterday. The cooperation would also include producing engines and setting up research and development centers in China, the joint statement added.
"Demand for Jaguar and Land Rover vehicles has been increasing rapidly in China," Chery Chairman Yin Tongyue and Jaguar Land Rover CEO Ralf Speth said jointly.
Last year, China became the third-largest market for Jaguar Land Rover with 42,000 vehicles sold, up an annual 61 percent. With 36,087 units Land Rover vehicles contributed most of the sales.
Zhang Yu, director at auto researcher Automotive Foresight in Shanghai, said Jaguar and Land Rover "have been seeking a local partnership in China for quite a long time" so that they could produce domestically. He added that Chery is attracted to Land Rover's advanced technologies on sport-utility vehicles.
Local media earlier reported the joint venture will set up a new plant in Changshu, Jiangsu Province, with a planned capa-city of 50,000 units per year. The plant may produce Land Rover models initially.
Jaguar Land Rover, acquired by India's Tata Motors in 2008, is expecting the rapidly growing Chinese market to help rev up its global sales.