Jaguar Land Rover, Chery Launch €1.4 Billion Venture

Tata Motors Ltd.'s Jaguar Land Rover unit and Chery Automobile Co. have broken ground for their 10.9 billion yuan (€1.4 billion) joint venture in Changsu in Jiangsu Province.

The 50:50 partnership Chery Jaguar Land Rover Automotive Co. Ltd. includes an R&D center, assembly and engine plants and development of a new China-specific brand.

The partners plan to begin production at the complex near Shanghai in 2014 with annual capacity of 130,000 vehicles. JLR said previously the first model will be Land Rover's Freelander or Range Rover Evoque compact SUV. Production of Jaguar cars will come next, followed eventually by models for the unnamed new brand.

China is JLR's largest and fastest-growing market. Sales of the two boutique brands there soared 78% year over year in the first 10 months of 2012. Producing locally will allow JLR to avoid China's 25% tariff on imported vehicles.

Tata declared in May 2011 that it was seeking a Chinese partner for its British brands. JLR and Chery finalized their venture in March. Their application sailed through China's often-glacial regulatory process to receive approval earlier this autumn.

JLR assembles vehicles from kits in several countries. But the Changsu facility will be the first to fully build vehicles outside the U.K. and will use Chinese-made parts.