Mumbai, Dec. 11: Jaguar Land Rover (JLR), the Tata Motors subsidiary, is planning to build a plant in Saudi Arabia as it seeks to take advantage of the fast growing market where demand for luxury vehicles is expected to surge.
JLR said it would start a study with Saudi Arabia’s National Industrial Clusters Development Program (NICDP) to determine the viability of setting up an automotive facility.
In a separate statement, the NICDP said the initial investment in the proposed plant would be around 4.5 billion riyal ($1.2 billion). The facility will produce close to 50,000 Land Rovers a year by 2017.
However, JLR pointed out that pending agreement on development options in Saudi Arabia, it might announce further plans in 2013. “Issues such as level of investment, potential capacity and job creation have not yet been discussed in detail between the parties,” it added.
JLR chief executive officer Ralf Speth and NICDP president Azzam Yaser Shalabi signed a letter of intent on Tuesday.
According to JLR, discussions between the company and the Saudi government are at a preliminary stage. It, however, added that opportunities have already been identified in aluminium component production.
Incidentally, the world’s largest integrated aluminium complex, which is a joint venture between Saudi Arabian Mining Company and Alcoa of the US, is set to begin production in 2014 at the Ras Al Khair facility, thereby creating potential opportunities for the automotive sector.
JLR expects to benefit from such a project as it has pioneered aluminium body development in the premium car segment, using lightweight metals for its Jaguar XJ model and the all-new Range Rover, which has an all-aluminium monocoque body structure.
“We are committed to further international partnerships to meet record demand for our highly sought after vehicles. The Kingdom of Saudi Arabia is an attractive potential development option, complementing our existing advanced facilities in Britain and recent manufacturing plans to expand in other countries including India and China,” Speth said. He said the “exciting” project could enable JLR to establish a joint venture partnership in a part of the world where luxury vehicle sales were expected to jump.
JLR’s move to build a plant in the kingdom comes at a time the car maker has been focussing its attention on emerging markets to counter the slowdown in developed markets such as Europe. The luxury car maker has been successful in its efforts in this direction as there has been a rise in JLR sales to emerging markets.
“If we proceed, it will complement our existing expansion in the UK and elsewhere,” Speth added.