Jaguar signs with Chery for Chinese venture

by Cornelius Nunev

Jaguar Land Rover promises to make automobiles and engines with its now partner, Chery Motors. The tow car makers completed an agreement Tuesday to jointly open a brand new plant in China. Both car manufacturers are properties of India's Tata Motors.

Getting approval

Chery, Jaguar and Land Rover could result in being sold in China if the two corporations get approval for the $2.78 billion enterprise. They are waiting or approval from Chinese regulators, according to Reuters.

Foreign car manufacturers must partner with locals

Approval can only come in a partnership from off-shore with a local Chinese company. The Chinese partner must own over 50 percent of the venture in order for it to qualify.

An important step

Vineet Hetamasaria is an auto industry analyst who explained:

"This is an important step for Jaguar Land Rover and Tata Motors moving forward. Though this is only an agreement, and it will be some time before we see the results."

Allocating the investment

A factory will be built with $1 billion of the investment while another $1 billion will go into producing a model for China, according to Reuters.

Manager at Raiffeisen Capital Management Juergen Maier said:

"A China-specific brand makes sense as you can target consumers looking to upgrade to Jaguar and Land Rover products."

The majority of the cash

The majority of the cash will be going into research and development to create new goods that will be jointly owned.

Watching for China to be ready

Land Rover has considered moving into China previously. It wanted to get its world sales up. China has a massive require for luxury vehicles at the moment, and it is only going up.

A statement was made by Jaguar Land Rover saying:

"Demand for Jaguar and Land Rover vehicles continues to increase significantly in China and we believe that Jaguar Land Rover and Chery can jointly realize the potential of these iconic brands."

Automaker competition

There still has not been a decision made, but Chinese regulators got a petition from Fuji Heavy Industries Ltd, Subaru's parent company, to do a join partnership with Chery in China in 2011. No answer has come from the regulators yet. The country also has General Motors Co., Volkswagen AG, and Daimler AG in it.

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