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JAGUAR LAND ROVER TO SPEND £240m ON BRAZILIAN PLANTBack

LandRoverJaguar Land Rover is spending £240m on a factory in Brazil, the third foreign plant in the rapid expansion of the booming British carmaker.

The management of the luxury brands, which have gone from near-bankruptcy to rude health in the past five years, regards South America as a crucial market in its strategy to continue high-volume growth by targeting the emerging rich in developing countries.

JLR, which is building a factory in China and already produces some cars in India, joins rival luxury marques Mercedes-Benz and Audi in announcing plans to manufacture in Brazil, seen as a strong future market and a useful gateway to the continent.

Construction of the factory in the state of Rio de Janeiro, which has been in the pipeline for some time, will start in the middle of next year. Production is due to begin in 2016 with a capacity of 24,000 cars per year and a headcount of 400, with an ambition to double that by the end of the decade, the company said.

Local production will allow JLR to avoid high tariffs on imported vehicles, in a country where the government has made clear its ambition to foster a substantial network of local suppliers. Unlike in China, carmakers can set up operations in Brazil without a local partner.

JLR, which has been revitalised since it was bought by India’s Tata Motors in 2008, has become a flag-bearer for the UK car industry, which has rebounded in the past decade thanks to a focus on premium models and cutting-edge technology such as electric and hybrid cars.

Luxury carmakers, cautious of a possible slowing of breakneck demand in China, are targeting growth in South American markets, where – similarly to India – high-end sports utility vehicles (SUVs) are becoming increasingly popular.

JLR’s sales in Brazil are up by more than 40 per cent year on year so far in 2013, and are on track to pass 10,000 by the end of the year. Land Rover SUVs account for more than 90 per cent of the company’s sales.

The British brands have been keen to stress their dedication to the UK, where it spends the majority of its annual £2.75bn investment, but has made clear that its future lies in further diversifying its global sales network.

JLR is also mulling a possible factory in Saudi Arabia, lured by a welcoming government and easy access to locally produced aluminium, which it uses to build an increasing proportion of its models.

(Source: Financial Times)

 

Posted by Leana Kell on 08/12/2013