Jaguar Land Rover 'gets NDRC's nod' for JV plant with Chery

The biggest foreign players in the mainland's luxury car sector may soon face a new challenge, with Jaguar Land Rover's apparent breakthrough in its plan to make its vehicles locally in the world's largest car market.

Del Sehmar, a spokesman for Tata Motors' Jaguar Land Rover in Mumbai, told Bloomberg yesterday that China's National Development and Reform Commission had verbally approved an application made by the company and Anhui-based Chery Automobile to establish a joint venture and build vehicles in China.

Chery said it had not yet received official word from the government. Jaguar Land Rover said it would make a statement after it received written notice of the approval.

The approval would mean Jaguar Land Rover, which sold a total of 47,000 units in China in the first eight months of this year - a year-on-year increase of 90 per cent - would be able to challenge some of the most popular luxury brands in the country, including Audi, Mercedes-Benz and BMW, because its prices will fall by up to a quarter once import tax is no longer applied.

Growth in car sales on the mainland - including those of luxury vehicles - has slowed in the past year, and car dealers are reporting thinning profit margins, swelling inventories and rising debt owing to robust expansion.

Jaguar Land Rover's China president, Bob Grace, told the mainland's Economic Observer in an interview last week that the company would continue to expand its capacity and sales network, because its inventory level was not only lower than its rivals' but demand in some of its dealerships outpaced supply.