JLR would have begun assembly in Brazil with the Freelander sourced in kit form from its Halewood plant near Liverpool (photo). KD assembly started last year at a Tata plant in India

JLR would have begun assembly in Brazil with the Freelander sourced in kit form from its Halewood plant near Liverpool (photo). KD assembly started last year at a Tata plant in India

Jaguar Land Rover’s plans for an assembly plant in Brazil have been shelved following a change in local tax rules for foreign companies.

The chief executive of Tata Motors' luxury vehicle unit, Ralf Speth, said the investment no longer made sense after a court decision that regional governments in the South American country could not use tax breaks to attract foreign investors.

He added the difference between importing vehicles and producing them locally had disappeared.

JLR told the Financial Times last July it was studying a plan to assemble Land Rover Freelander small SUVs from kits in Brazil in order to avoid high import taxes. Trade minister Fernando Pimentel had said the previous November JLR planned to build the factory.

The automaker already assembles Freelanders from kits in India and is currently awaiting regulatory approval in China for a joint venture with Chery Automobile to build Jaguar and Land Rover cars.

Speth said he hoped Brazilian authorities might introduce a new scheme in the next few weeks in which case he would look at potential investment there again.