Thursday, September 15, 2011

Greatwall Motors may become JLR's Chinese partner: Domain-b

Tata Motors-owned Jaguar Land Rover's (JLR) year-long hunt for a Chinese partner may finally end if its advanced talks with privately-owned Greatwall Motors, China's largest SUV producer.

After holding inconclusive talks with state-owned Shanghai Automotive Industry Group (SAIC) and Chery Automobile Co, Hong Kong-listed Greatwall seems to has emerged the most acceptable for JLR since it is one of the few remaining Chinese carmakers that do not have a joint venture, according to a report today from China Car Times.

The added incentive is that Greatwall has just built a new, state of the art factory in Tianjin, which can produce about 800,000 cars annually at peak capacity – nearly double the 245,000 cars sold by JLR last year.

With naming the company, Ralf Speth, CEO of JLR told The Telegraph yesterday at the Frankfurt Motor Show that JLR is in "very intensive discussions" with a leading Chinese car maker and government officials for forming a joint venture to produce its luxury cars in China.

The JV is likely to be inked by this year end and regulatory clearance and other approvals from the government are expected by next year.

JLR had last year initiated talks with SAIC and Chery for first assembling Land Rover models and later for a joint production of both the Jaguar and Land Rover models.

In October 2009, JLR had said that it could move some production to China in order to avoid import tariffs on British products by the Chinese government. China imposes a 10-per cent tariff on imported auto parts, but since April 2005, it has imposed a higher 25-per cent charge on the value of finished products.

It also slaps a 25-per cent tariff on the import of finished automobiles. But it has no problems if foreign car companies want to set up manufacturing facilities in China.

The booming auto market in China has led most global car manufacturers to set up plants in the country with local joint venture partners.

JLR has seen its sales in China picking up as the Chinese upper class have shown a penchant for Jaguar and Land Rover cars.

JLR, which recorded pre-tax profit of £1.1 billion and sold 245,000 cars last year, of which, more than 27,000 cars were sold in China. China now accounts for 11 per cent of JLR's total sales.

Greatwall Motors
Founded in 1976 and based in Baoding in  Hebei province, Greatwall, which is named after the Great Wall of China, has 30 subsidiaries and 38,000 employees.

The company initially started manufactured only trucks, but has now also diversified to SUVs,  vans, pick-ups and sedans. It is also planning to sell its own elcectric vehicle this year and had showcased an all-electric SUV at the 2010 Guangzhou Auto Show.

For 2010, Greatwall sold 390,000 vehicles, registering a year-on-year increase of 70 per cent, well over the average growth of the whole industry, and a turnover of 29 billion yuan (Rs21,500 crore or £2.80 billion).

It is China's largest exporter of Chinese-made vehicles and has a joint venture production with Bulgarian company, Litex, where it is building a 50,000-vehicle plant in the town of Lovech for making its Voleex C10 sedan, Steed pick-up truck and Hover SUV.

It is the only Chinese car manufacturer that sells its vehicle in the European Union and has partnered with local business in eight countries for assembling its vehicles from knock-down kits.

The company says in its website that it is open for joint ventures ''provided that such cooperation has complementary advantages and is beneficial to the development of self-owned brands.''

Great Wall has pacts with several overseas car component manufacturers including Germany's Bosch GmbH, but any product borne out of joint research becomes the intellectual property right of Greatwall.

Source: Domain-b

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