By Santanu Choudhury and Jeff Bennett
Jaguar Land Rover Automotive PLC will build its next car plant
in Slovakia rather than the U.S., as the British car maker looks to
stay in step with growing world-wide demand for luxury
vehicles.
The unit of India's Tata Motors Ltd. on Tuesday signed a letter
of intent, or an initial agreement, with the government of Slovakia
to study the feasibility of building a factory to produce up to
300,000 vehicles a year. The factory would also manufacture a range
of aluminum JLR vehicles, with the first cars rolling off the line
in 2018.
A final decision on building the plant in the western city of
Nitra will be taken later this year, the company said.
JLR is attempting to meet growing world-wide demand for luxury
vehicles. From the U.S. to Europe to China, customers are opting to
buy increasingly higher-end vehicles. Auto makers, such as Ford
Motor Co. and General Motors Co., say Chinese consumers continue to
spend money on luxury sport-utility vehicles despite concerns over
a slowing economy.
Last year, JLR sold 462,678 vehicles globally, a 9% increase
over the previous year. This year, the company anticipates sales
topping 500,000 units.
A JLR spokesman declined to say why the auto maker chose
Slovakia over the U.S. The location, however, gives JLR access to
an establish base of parts makers.
Slovakia has already seen significant automotive investments in
the past decade from the likes of Volkswagen AG, PSA Peugeot
Citroën and Hyundai Motor Co., according to IHS Automotive analyst
Ian Fletcher.
Tata Motors Chairman Emeritus Ratan Tata in February said the
U.S. and Mexico were under consideration for the JLR plant. There
was speculation the plant could be placed in South Carolina or
Georgia. The southern U.S. has seen its share of automotive wins
over the past year, including announcements by Daimler AG that it
would move its Mercedes-Benz U.S. headquarters from New Jersey to
Georgia and build a Sprinter van production plant in South
Carolina.
JLR has initiated several moves to expand its manufacturing
footprint world-wide to meet growing demand for its cars. Sales of
JLR vehicles have doubled in the past five years.
Last month, it signed a manufacturing contract with a unit of
Magna International PLC to build some of its luxury vehicles in
Austria. JLR last October opened its first car plant in China, and
it is scheduled to open a new manufacturing plant in Brazil next
year.
"With its established premium automotive industry, Slovakia is
an attractive potential development opportunity for us," said Ralf
Speth, JLR's chief executive. The new plant will complement the
company's existing facilities in the U.K., China, India and the one
under construction in Brazil, he added.
Write to Santanu Choudhury at santanu.choudhury@wsj.com and Jeff
Bennett at jeff.bennett@wsj.com
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