Chery Jaguar Land Rover Joint Venture project will be approved to land deep plowing channels in China

Recently, it was reported that the joint venture between Chery and Jaguar Land Rover in Changshu, Jiangsu Province has officially passed the project approval of the National Development and Reform Commission, and the relevant business registration and foundation laying ceremony will be formally launched on that day.

The sources from both sides of the joint-venture shareholders confirmed this to the reporter. However, due to the fact that the relevant department has not officially issued a document, the two parties have adopted a low-key approach to the news and all said, "Everything must be subject to the approval of the document."

"The joint venture project has indeed made key progress. The relevant government departments have reported that they have approved a joint venture project between Jaguar Land Rover and Chery Automobile." A source close to Chery Jaguar Land Rover told reporters.

Jaguar Land Rover and Chery Automobile have officially obtained production qualifications from the announcement of joint venture intentions for more than two years. The above source told reporters that the joint venture project between the two parties could be described as twists and turns since it was reported to the NDRC for final approval.

Localized production in the Chinese automotive market is particularly important for Jaguar Land Rover. After two years of operation, he finally settled in China. The relevant person in charge of Jaguar Land Rover (China) told reporters that Jaguar Land Rover will formally release information after the official release of the approval, and will release the next phase of the strategy for the Chinese market. The person said, "There is no timetable yet and it is not expected to be too long."

When the joint venture between the two sides was almost clear, Chery Automobile was even more cautious. Chery Automobile spokesman Huang Huaqiong said in an interview with reporters that no information has yet been obtained on joint venture projects.

According to the reporter, the approval of the joint venture has become an "open secret" within Chery Automobile. The Chery’s high level of cautious attitude is mainly due to the fact that this year’s Chery Automobile, another joint venture project, has not shown clear performance in the Chinese market, making Chery’s joint ventures difficult to show.

In addition, at the time of the joint venture approval of the two parties, the layout of the sales channels of the two companies has already begun. In an interview with reporters, Jaguar Land Rover executives repeatedly expressed their eagerness to quickly expand the sales network; Chery Automobile is also working to sort out the sales network. Analysts believe that the rich sales network of Chery Automobile is likely to dominate in the game of joint venture sales channels.

According to relevant government disclosure information, the joint venture project of Chery Jaguar Land Rover’s 130,000 passenger vehicles has passed the preliminary review of land for construction by the Ministry of Land and Resources with a land area of ​​81.13 hectares.

Previously, the company disclosed the model planning and capacity design of the Chery Jaguar Land Rover joint venture. It is reported that in the first phase of the 130,000 capacity planning, specific models include 34,000 Range Rover Aurora, 43,000 Freelander 2nd generation, 23,000 joint-venture brand cars, 30,000 Jaguar cars. After that, the two parties also considered measures such as expansion in the long run to achieve an annual production capacity of 250,000 passenger cars.

The process of Jaguar Land Rover landing in the Chinese market is quite a setback. As early as May 2010, Jaguar Land Rover announced that it plans to carry out local production in China within two years. Since then, it has started a series of “family-seeking” journeys and contacted several companies including JMC, Geely, Changfeng, and Great Wall. Until October 2010, Di Shihao, the then vice president of Land Rover China, first admitted to the media that Land Rover was negotiating with Chery Automobile on domestic matters.

Since then, Jaguar Land Rover and Chery Automobile have started joint venture negotiations in the past two years. Until March 21 this year, the two parties issued a joint statement saying that Jaguar Land Rover and Chery Automobile have reached an agreement on the establishment of a joint venture company in China.

In April, the two sides submitted the EIA report to the Ministry of Environmental Protection. The joint venture of Chery Jaguar Land Rover is located in Changshu, Jiangsu, with an annual production capacity of 130,000 vehicles and a total investment of 1.209533 trillion yuan.

According to the final joint venture agenda, the joint venture factory will be located in Changshu Economic and Technological Development Zone, Jiangsu Province, and will be located adjacent to the production base of Chery Automobile, another joint venture company of Chery. The construction scale includes an automobile plant and an engine plant. In July 2014, it was officially completed and put into operation.

Technology Joint Venture Benefits Compared with other joint venture projects, this approval progress is called "efficient." What are the reasons that prompted the Jaguar Land Rover to set up in China to speed up the process? The above source told reporters that the technical cooperation between the two sides in the powertrain has won the appreciation of the relevant departments and is one of the key factors in accelerating approval.

According to the reporter’s understanding, in terms of powertrain, the joint venture engine factory of the two sides will initially have an annual production capacity of 130,000 units and plan to expand it to a production capacity of 250,000 units in the long-term.

In addition, the reporter learned that in terms of engine matching, the TGDI engine jointly developed by Jaguar Land Rover and Chery Automobile will be carried on most joint venture models. After the joint venture with Jaguar Land Rover, many original Jaguar Land Rover engineers will be assigned to the Chery R&D team. Both parties will jointly develop engines. In addition, the joint venture plant will also produce the Land Rover 3.0 LV6 engine in advance. In addition to the 2.0TGDI and Land Rover 3.0V6 engines, the two companies will also produce 1.6TGDI engines to meet the market trend of increasingly smaller sized SUV models, as well as the increasingly stringent passenger vehicle fuel limit standards.

According to the reporter, the development of smaller engines is based on the following two reasons: First, the unique needs of the Chinese market determine the growth of sales of small-displacement SUVs; second, Ford Motors, which supplies engines for Jaguar Land Rover, is also in the Chinese market. Accelerate the layout of small displacement SUV models.

In the production plan, the engines produced by the joint venture in the initial period were 1.6TGDI, 2.0TGDI and Land Rover 3.0V6 engines, and gradually introduced other new engines developed by Land Rover. It is reported that the initial production plan for the engine factory is 125,000 TGDI engines and 5,000 3.0V6 engines.

In addition, the agreement also includes the production of Jaguar Land Rover brand models and joint-venture models of their own brands, the production of supporting engines, sales of automotive products produced by joint venture companies, and the establishment of research and development centers. Both parties will carry out further work in accordance with China's prescribed procedures.

Sales network deployment has been completed. At the conclusion of the joint venture project approval process, Jaguar Land Rover and Chery Automobile will usher in the first domestic model in 2014. At present, the layout of the joint venture company's sales network has begun.

During the Chengdu Auto Show in September, Gao Bo, President of Jaguar Land Rover China, said in an interview that there are currently 125 authorized dealers signed by Jaguar Land Rover in China, of which 89 have been put into operation. “In terms of channels, Jaguar Land Rover will The key task is to cover the third and fourth-tier cities."

At present, it is a trend for luxury car brands to accelerate the expansion of dealer networks in the Chinese market. To ensure profitability of dealers before domestic models are put on the market, it is a problem that Jaguar Land Rover and other luxury car brands must face.

In Chery Automobile, previously announced the re-branding and sales channels. Some analysts believe that at present, Chery Automobile is busy handling its own product line and network layout, and it will take care of the planning of Chery Jaguar Land Rover dealers in the short term. However, for the deep plowing sales network for many years, the inherent network advantages of the Chery Automobile 3rd and 4th line markets should not be underestimated.

The above analysts told the reporter that since Chery’s first joint venture project, Guanzhi Automobile, was controversial after its establishment, Chery Automobile needed a strong joint venture project to enhance its brand. Jaguar Land Rover is such a suitable choice.

Earlier, Chery had tried to establish a joint venture with Chrysler, Fiat, and Subaru. However, due to various reasons, they failed to achieve their goals.

In terms of Jaguar Land Rover, data shows that from January to August 2012, Jaguar Land Rover has sold more than 47,000 units in China, an increase of nearly 90% year-on-year. The profit contribution from the Chinese market is particularly important for Jaguar Land Rover.

With the declining high-end car market in Europe and America, all major luxury brands see the growth in the Chinese market as the main growth driver in the future. It is reported that since entering China, Jaguar has also begun to further develop strategies for long-term development in the domestic market, and sales volume has further increased in the Chinese market.

According to the above analysts, Jaguar Land Rover’s reliance on the Chinese market will become even more apparent after China’s production has settled. Looking at the Chinese market where luxury brands are located, Jaguar Land Rover will still face no small marketing challenges.