Could Brazil cooperation follow Chery-JLR China JV?
The proximity of Chery's newly-established Brazilian car factory to the new Jaguar Land Rover assembly plant, scheduled to be opened in the next quarter of 2016, is likely to result in cooperation between the Chinese automaker and its Indian-British Chinese joint venture partner, local reports suggest.
According to Autodata, Land Rover declined to comment but admitted its "always keeps an eye on several possibilities for sustainable development of our operations in [Brazil]."
Chery, which operates a joint venture factory in China with JLR, building the Range Rover Evoque, has a plant in Jacareí (São Paulo state) 180km/112 miles from JLR's Itatiaia (Rio de Janeiro state) factory. Both are served by the same, high-volume motorway linking the country's two largest capitals.
Chery has invested heavily in a paint shop - always the greatest single cost of a new assembly plant - to boost annual capacity to 100,000 units a year but nonetheless has excess capacity.
JLR does not need to make such an investment in its first year of production under Inovar-Auto rules. It would be quite feasible for the new JLR plant, planned initially for 24,000 units a year, to share such expensive facilities relatively close by.
Frank Witteman, newly-appointed CEO of JLR in Brazil, has business experience in China and access to business partner Chery. Negotiations took a long time but the JV plant finally was opened in 2014.
Chery started production in Brazil in 2014, following a spend of US$400m/BRL1.5bn. JLRs planned investment is $200mi/BRL725m.