Jaguar Land Rover and Chery Automobile are seeking regulatory approval for a $2.8bn car venture in eastern China. The deal, first reported by Chinese media last year, marks Jaguar Land Rover’s latest effort to expand their 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.
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.
When China opened their doors to foreign automakers 30 years ago, the approval process was relatively straightforward. But now that General Motors, Volkswagen and other foreign producers dominate the market and China’s native auto industry remains uncompetitive, Beijing has started to raise the bar for new entrants.
The government recently removed the auto industry from a list of encouraged industries, making it tougher for foreigners to win new auto projects.
If foreign cars made at a local-foreign auto venture want to sell cars to Chinese government agencies, the venture must set up its own joint research and development facility and invest 3% of its annual proceeds in R&D for at least two consecutive years, according to the country’s new rules. The venture is also required to develop and build its own car brand.