What do you do when you are a luxury carmaker and sales aren’t going as well as expected? Simple: you invest in China, as despite the cooling car market, buyers continue to have an appetite for foreign luxury cars.
In July, we reported that Jaguar and Land Rover owner, Tata Motors, would invest heavily in the two brands in order to improve their sales, especially those of Jaguar, which are on a sharp decline.
In the same report, Tata mentioned that the company was “considering options for assembly and localization of selected Jaguar Land Rover products in China”.
The problem is, you don’t just march into the country and start building a plant. According to the Chinese law, you must have a local partner. And since taxes on imported cars make their cost prohibitive, any company that sells cars in China has followed the same route.
Now JLR is also examining possible joint ventures. Reuters reported that, according to China Business Review, JLR has decided to form a partnership with Chery, and the two companies are already seeking approval from local authorities to go ahead with their business plan.
Representatives of both companies denied commenting on the matter. Perhaps that’s because Chery has already been burnt when its partnership with Subaru was vetoed by the government on the grounds that Toyota, which is a Subaru shareholder, already has two such ventures in the country.
If the deal goes through, JLR’s Chinese plant is expected to manufacture 40,000 units annually, all of which will be sold in the local market.
Story source: Reuters
