Tata Motors-owned Jaguar Land Rover and Chery Automobile may spend as much as US$3bn over five years on their Chinese joint venture confirmed on Wednesday, a US newspaper reported.
Citing two unnamed sources “familiar with the matter”, the Detroit News said the two companies would spend as much as $1bn on a new factory, about $1bn on establishing a China-specific brand and $500m to $1bn on research and development.
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China requires overseas carmakers to work with local companies, who must own at least 50% of joint ventures, to set up production. Locally built vehicles are cheaper because they’re not subject to import duties.
“Having a local assembly unit will help cut waiting lists and production costs,” Juergen Maier, a Vienna, Austria-based fund manager at Raiffeisen Capital Management, told the paper.
“A China-specific brand makes sense as you can target consumers looking to upgrade to Jaguar and Land Rover products.”
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