JLR, Chery JV launch new factory in Jiangsu

Employees work at the new plant of the joint venture between JLR and Chery in Changshu, East China's Jiangsu Province Tuesday. Photo: Yang Jing/GT

A joint venture between premium British automaker Jaguar Land Rover (JLR) and Chinese firm Chery Inc Tuesday formally opened its new plant in Changshu, East China's Jiangsu Province, and rolled out its first domestically produced Land Rover Evoque.

It is the first time that the British brand has fully manufactured vehicles outside the UK, and the joint venture, for which each party holds a 50 percent stake in, will produce both Land Rover and Jaguar-branded vehicles, as well as joint venture-branded vehicles.

Chery Jaguar Land Rover Automotive Co, which was founded in November 2012 with a total investment of 10.9 billion yuan ($1.63 billion), will have an annual production capacity of around 130,000 vehicles, Chris Bryant, president of Chery JLR, said at the plant opening ceremony.

With the production being localized, it is expected that the price of JLR cars will drop in China while the sales volume will increase, Zeng Zhiling, a senior analyst at consultancy LMC Automotive, told the Global Times Tuesday.

JLR sold a total of 95,237 units in China in 2013, with 30 percent year-on-year growth, making China the largest market for the company.

In the first three quarters of 2014, JLR sold 92,265 vehicles in the Chinese market, almost equal to its sales for the entire 2013, with 38.7 percent year-on-year growth.

China's premium auto market has long been dominated by three German brands - Audi, BMW and Mercedes-Benz.

JLR's sales in the first nine months in the -Chinese market ranked No.4 among premium brands, behind Mercedes-Benz and surpassing Volvo, according to media reports.

JLR will not be able to challenge the top three in the Chinese market in the short term due to its dependence on SUVs as the top three brands all have a strong product portfolio including SUVs and sedans, Zeng noted.

The sales of SUV reportedly made up 81.6 percent of JLR's September sales, while the two main models under Jaguar, its XF and XJ models saw 4.9 percent and 10.7 percent year-on-year sales drops respectively.

Besides the Evoque, the bestseller for Land Rover in the first three quarters of this year, the joint venture will produce two other models from 2016 - another Land Rover-branded vehicle and one that cannot be disclosed yet, Zhu Guohua, vice president of the joint venture, told the media on Tuesday.

The domestically made Evoque will be officially launched at the 12th China (Guangzhou) International Automobile Exhibition to be held in November and hit the market next year.

As for the Chinese firm Chery, it is not currently clear whether it plans to be a silent partner or will require a big say in the joint venture, Zeng noted.

There is no doubt that the joint venture will bring on financial benefit for Chery but improvement of the brand value still rests on the automaker itself, said Zeng.