Chery Jaguar Land Rover project is still waiting for approval from the Development and Reform Commission

On the afternoon of March 21, the Phoenix Automotive News officially signed a joint venture between Chery Automobile and Jaguar Land Rover. After full consultation, the two parties have reached an agreement on the establishment of a joint venture company in China. Both Chery and Jaguar Land Rover plan to establish a joint venture in the form of a stock exchange. The contents of the agreement include: production of Jaguar Land Rover brand models and joint-venture models of their own brands, production of matching engines, sales of automotive products produced by joint venture companies, establishment of R&D centers, etc. Both parties will carry out further work in accordance with the relevant procedures.

There is no bright spot in terms of the contents of the agreement. It only satisfies the basic conditions for the joint venture project of passenger vehicles by the Ministry of Industry and Information Technology and the National Development and Reform Commission. The project was once not favored by a number of industry experts, and there are two main reasons. First, at the end of 2011, the NDRC cancelled the entire vehicle manufacturing joint venture project from the original encouragement policy. According to major media reports at the time, Jaguar Land Rover plans to establish a joint venture factory in China in order to make up for its lack of capacity as soon as possible. A memorandum signed in December 2011 between the two parties shows that Jaguar Land Rover plans to start production of its Chinese plant in 2014 and achieve the initial production capacity of 50,000 vehicles. This is obviously contrary to the NDRC’s strict prevention of overcapacity.

The second Jaguar Land Rover lacks key technologies recognized by the NDRC. According to the “Management Rules for Passenger Vehicle Production and Product Access Management (Draft for Soliciting Opinions)” promulgated by the Ministry of Industry and Information Technology, it is clearly stated that the joint venture project shall include the production of engines for the complete vehicle. As we all know, Jaguar Land Rover currently does not have the engine production capacity, Jaguar Land Rover's engine is mainly from the Ford Motor Company and PSA Peugeot Citroen. In 2008, India’s Tata Group acquired Jaguar Land Rover from Ford Motor Company for US$2.3 billion. However, Ford has been holding Land Rover’s technical support and key parts supply business.

The most critical issue at the moment is how Chery Jaguar Land Rover has demonstrated its technological R&D capabilities to the NDRC. All of its key components need to be supplied by suppliers, and how can they provide key technologies to joint ventures? Jaguar Land Rover's first engine factory invested 350 million pounds in the UK and is expected to be put into production by 2015. Then, when will China's R&D center and China's engine plant be completed?

The growth of China's luxury auto market is obvious to all. Relevant statistics show that in 2010 China's luxury car market sales reached 676,000 units, an increase of 69% year-on-year, far higher than the average growth rate of the market. In the first three quarters of 2011, the average growth rate of the luxury car market also exceeded 40% in the background of the overall sluggish Chinese auto market.

At the same time, Jaguar Land Rover’s performance in the domestic market is also sufficient to speed up domestic issues. From January to November of this year, Jaguar Land Rover has sold 37,000 vehicles in China, including 5,100 Jaguar branded vehicles, an increase of 110% year-on-year, and Land Rover sales of 32,000 vehicles, an increase of 60% year-on-year.

If we take the recent Changan Peugeot Citroën (CAPSA) project as a reference, Chery Jaguar Land Rover will have a long way to go, although CAPSA has achieved the fastest speed of joint venture projects since negotiating and unveiling for 24 months, but most The time is spent in the process of approval by the National Development and Reform Commission. Since the National Development and Reform Commission has already indicated that it will no longer encourage vehicle manufacturing joint venture projects, the next step is how Chery Jaguar Land Rover will pass the approval and become a matter of concern in the industry. Phoenix Motors will continue to track the progress of this project.