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Jaguar Land Rover expands into Brazil

Ahead of the FIFA World Cup next summer, at least one British team has landed a result in Brazil. Jaguar Land Rover (JLR) has announced plans to build a factory in Brazil with the capacity to build 24,000 cars per year. JLR has indicated that the announcement is the result of months of negotiations with the authorities in Rio de Janeiro.

Ahead of the FIFA World Cup next summer, at least one British team has landed a result in Brazil. Jaguar Land Rover (JLR) has announced plans to build a factory in Brazil with the capacity to build 24,000 cars per year. JLR has indicated that the announcement is the result of months of negotiations with the authorities in Rio de Janeiro. JLR is ready to pump £240 million into the new car plant, which is due to produce its first car in 2016. The factory will be the company's first venture in South America but it comes on top of another expansion scheme, where JLR is building a factory in China.

Commenting on the new Brazil venture, JLR chief executive, Dr Ralf Speth, said: "Brazil and the surrounding regions are very important. Customers there have an increasing appetite for highly capable premium products." The factory will be a key element in JLR's strategy of increasing sales in the region. In the year to October, the company has sold 9,549 vehicles in Brazil, representing a 40% increase on 2012. The most popular models are the Range Rover Discovery, Evoque and Freelander. A major part of the thinking behind the new factory is avoiding import duties. Brazil levies substantial tariffs on imported cars, which inflates the selling price and makes them less competitive. Being built locally means that JLR cars will not incur this tax and hence will be far cheaper and more attractive to Brazilian buyers.

In China, JLR was compelled by the authorities to form a partnership with a Chinese firm. This resulted in a joint venture with Chinese carmaker, Cherry Automobile Company. Together, JLR and Cherry are building a new plant at Changshu to build JLR cars. Together, the moves reveal the JLR strategy of selling more cars to the emerging, so-called BRIC economies, of Brazil, Russia, India and China. JLR exports around 80% of its cars and earlier this year revealed that China had overtaken the UK as its biggest single market.

JLR is now owned by giant Indian conglomerate, Tata, after buying both Jaguar and Land Rover from US giants Ford in 2008. The purchase has been hailed as a great success and JLR has moved from strength to strength after the takeover. The company's export success is not just creating new jobs outside of the UK. In September the company announced that it was expanding its Solihull plant to cope with increasing demand, creating around 1,700 new jobs in the process. The move was part of a wider £1.5 billion investment to widen the JLR product range.

 

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