Jaguar is set to roar in China with a US$1.75 billion (Dh6.42bn) investment to build a manufacturing plant in the east of the country and create a new brand to cater to the nation's consumers.
The 50:50 venture between Tata Motors' Jaguar Land Rover (JLR) unit and Chery Automobile will also set up a research and development centre, with the factory due to be completed in 2014, the companies said yesterday.
JLR, which counts China as its fastest-growing market, joins Volkswagen's Audi, Daimler's Mercedes-Benz and BMW in locating production facilities in the world's biggest vehicle market. The government requires overseas car makers to work with local companies to produce domestically and avoid the nation's 25 per cent import duty.
"Both parties need each other," said Bill Russo, the president of the consultancy Synergistic in Beijing.
"JLR needs to be localised because, quite frankly, their competition is localising.
"It gives Chery an opportunity to really upgrade its capabilities in a time when it really needs that," he said.
JLR profits rose 77 per cent in the second quarter to £305 million (Dh1.79bn).
Surging China sales of Land Rover vehicles led by the Evoque have helped Ralf Speth, the chief executive, to offset slowing demand in Europe.
Jaguar in May said it would spend £2bn (Dh11.66bn) this year to expand under a plan to introduce 40 new or upgraded models in the next five years.
The company, which showed its first two-seater sports car in almost four decades at the Paris Motor Show in September, is targeting as much as 20 per cent of the full-sized sports car market, said Steven de Ploey, the company's marketing head.
JLR will also begin deliveries next year of the new Range Rover 4x4.
Jaguar Land Rover sold 25,176 vehicles last month, a 10 per cent increase from a year earlier, driven by demand for the Evoque and Range Rover Sport.
Combined sales in the first 10 months rose 35 per cent to 294,291 vehicles.