Jaguar Land Rover may build Saudia Arabia plant

MUMBAI/RIYADH Tue Dec 11, 2012 8:29pm IST

The Range Rover is seen at the Jaguar-Land Rover exhibition booth during the International Motor Show (IAA) in Frankfurt, September 14, 2011. REUTERS/Alex Domanski/Files

The Range Rover is seen at the Jaguar-Land Rover exhibition booth during the International Motor Show (IAA) in Frankfurt, September 14, 2011.

Credit: Reuters/Alex Domanski/Files

Related Topics

Stocks

   

MUMBAI/RIYADH (Reuters) - Jaguar Land Rover (JLR) signed a preliminary deal to build a plant in Saudi Arabia, extending its expansion in fast-growing markets having already started work on a plant in China.

The British luxury marque, owned by India's Tata Motors (TAMO.NS), signed the deal to look at the possibility of making 50,000 Land Rovers a year at a Saudi plant costing some 4.5 billion riyals, the country's commerce and industry ministry said in a statement.

A spokesman for JLR said the agreement was "purely exploratory" and it was too early to provide any details.

JLR has seen huge demand over the past year from emerging markets such as China, Russia and countries in the Middle East for its luxury SUVs and sleek sedans, offsetting sluggish growth in developed markets.

The company and its Chinese partner Chery Automobile said last month they had laid the foundation stone for a factory near Shanghai.

"I can't make any statement for these kind of investment figures. We have just signed a letter of intent .... it's a letter of intent to investigate the project," JLR Chief Executive Ralf Speth told reporters in the Saudi capital.

"A memorandum of understanding is ... scheduled in the next year and this memorandum of understanding will have more facts and figures."

DIVERSIFICATION DRIVE

The proposed plant, which will assemble four-wheel-drive Land Rovers, will likely start up in 2017 and will be located in Yanbu on the kingdom's Red Sea coast, said Azzam Shalabi, head of the Saudi commerce and industry ministry's industrial clusters programme.

Saudi Arabia, which does not have an existing automotive industry, is seeking to develop local industry to diversify its economy away from oil exports, leveraging its abundant natural resources and low electricity prices.

JLR said in its statement it had already identified opportunities for aluminium component production in the country, but it did not specify where the investment for the proposed plant would come from.

The company would not lose British jobs to any new Saudi plant, Speth said. "If we proceed, it will complement our existing expansion in the UK and elsewhere," Speth was quoted as saying in the JLR statement.

For Tata Motors, JLR is a key unit which delivers 90 percent of group profit. The group's shares jumped last month after it reported that July-September margins at JLR had improved to 14.8 percent from 14.4 percent a year earlier.

Ratan Tata, outgoing chairman of Tata Group, told a magazine in September that Tata Motors was looking using local aluminium production in Saudi Arabia, where Saudi Arabian Mining Co (Maaden) 1211.SE and Alcoa Inc (AA.N) are building a smelter scheduled to start production next year.

That smelter is on Saudi Arabia's Gulf coast, across the country from Yanbu, but Shalabi said a rail link connecting the two areas would be operational by 2017 to ship rolled aluminium to the Land Rover factory.

(Editing by Muralikumar Anantharaman and David Holmes)

FILED UNDER:

Religion and Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage