Jaguar Land Rover is looking into whether to begin car production in Saudi Arabia, among other options in the country, as part of its strategy to forge international partnerships.
The luxury car-maker, which is moving ahead with plans to manufacture cars near Shanghai in partnership with China’s Chery Automobile Co, said it was in preliminary discussions with the Saudi Arabia Government, and that a feasibility study was now under way to assess the country’s potential as a location for an automotive facility.
“The Kingdom of Saudi Arabia is an attractive potential development option,” said Chief Executive Ralf Speth in a statement on Tuesday. The company said it had already identified opportunities for cooperation with the country on the production of aluminium components, a key material for some of its latest models including the Jaguar XJ and the latest Range Rover sports vehicle. It will announce further details of any plans in 2013.
The company is understood to be looking at a number of options including production and assembly of vehicles, to the manufacture of automobile parts. A spokesperson said it would be “premature” to suggest what form the investment would take. Reuters quoted the Saudi Commerce Ministry as saying that JLR had signed a $1.2-billion preliminary deal with the government for the manufacture of 50,000 Land Rovers a year from 2017.
“If they do anything it is likely to be a manufacturing centre for components,” says Ian Fletcher, a senior auto analyst at IHS Global Insight. “The biggest benefit Saudi Arabia could offer is the ability to make components at low cost and being able to ship the ready formed components to the rest of the world.”
Lightweight materials such as aluminium and carbon fiber are becoming increasingly important materials for car makers, as they seek to improve fuel efficiency and meet ever stricter international requirements. “For JLR it’s a key body part strategy and that’s why they are focusing attention on aluminium,” says Fletcher.
In the first 10 months of 2012, sales of Jaguar Land Rover rose 35 percent against the same period the year before, led by China, where sales are up 78 percent.
A spokesperson for the company said that any potential investments in Saudi Arabia would be supplemental to its UK business, and would not impact its investments in the country in the slightest. “There is no question of any change,” they said. “The plants in the UK are very much the centre of our business.”