Ford to Get Royalties on Land Rovers Made in China

Jaguar Land Rover must pay royalties to former parent Ford Motor Co. when it begins building some Land Rover models outside the U.K.

The payments are among the terms of Ford's sale of the two British brands to India's Tata Motors Ltd. in 2008. Tata tells U.S. securities regulators that royalties are due on vehicles that ride on Ford's EuCD platform, which include Land Rover's Freelander and Evoque compact SUVs.

The companies have not disclosed the size of the royalty payments.

But analysts tell Bloomberg that the added royalty expense for non-U.K. vehicles will surely be offset by savings on import duties. China imposes a 25% tariff on imported vehicles.

Thus far, JLR builds all its vehicles in England or ships kits from there for assembly in such markets as India.

That will change next year when the company opens an assembly plant with Chinese partner Chery Automobile Co. in Changsu, China. The 10.9 billion-yuan ($1.7 billion) facility will have annual capacity to make 130,000 Jaguar and Land Rover vehicles. JLR and Chery have not disclosed which models will be made there.

JLR said last month it is conducting a feasibility study for an assembly plant in Saudi Arabia. Saudi officials say the 4.5 billion-riyal ($1.2 billion) complex would have annual capacity of 50,000 Land Rover SUVs by 2017.