Jaguar Land Rover, Chery seek Ok for $2.78 bln joint venture

PanARMENIAN.Net - Jaguar Land Rover and Chery Automobile Co are seeking regulatory approval for a 17.5 billion yuan ($2.78 billion) car venture in eastern China, two people with direct knowledge of the deal said, according to Reuters.

The deal marks Jaguar Land Rover's latest effort to expand its appeal in the world's largest auto market where luxury sedans and SUVs remain in hot demand even as the overall car market cools.

The JLR-Chery venture, to be located close to Shanghai in Changshu city, will make Land Rover SUVs initially, followed by Jaguars in the second phase, one person told Reuters.

"The plan is still subject to the approval of the National Development and Reform Commission at this stage. The size of the investment could be adjusted accordingly," another person said.

Both sources declined to be named because of the sensitive nature of the proceedings.

JLR, controlled by India's Tata Motors Ltd had previously explored joint venture deals with other Chinese partners, including Great Wall Motor Co Ltd, but made little headway.

A Tata Motor spokesman declined to comment on the Chery tie, but its CFO, C.R. Ramakrishnan, said recently that JLR had already picked a Chinese partner.

The Chery tie, if approved, will give JLR a much-desired local production base in China where global luxury markers including BMW, Mercedes-Benz and Audi have already made windfalls, thanks to growing ranks of wealthy Chinese.

All three German marques, which started local manufacturing in China years ago, saw their China sales rise more than a third in 2011 when the overall market slowed after years of frantic expansion.

JLR sold 42,000 cars in China last year, about 13 percent of Audi's tally of roughly 313,000.