JLR to produce cars in Saudi Arabia

11 Dec, 2012 9:00am Jack Rix

Jaguar has signed a letter of intent with the Saudi Government for a factory

Jaguar Land Rover has signed a letter of intent with the Saudi Arabian Government to consider it as a "possible future location for a Jaguar Land Rover automotive facility". The facilty would also include production and pressing of its own aluminium components to satisfy JLR’s ever-increasing demand for the lightweight metal in its range.

If all goes to plan, JLR wants to have an aluminium foundry and press shop installed at the new factory, which it would operate but be owned by the Saudi Government. The advantages for JLR are a stable supply of price-protected aluminium, a metal with notoriously volatile prices, while the abundance of bauxite (the ore used to make aluminium) and availability of cheap energy in Saudi Arabia makes it the perfect place for the pioneering venture.

Starting in around two years' time, JLR’s plan is to build one new car in Saudi Arabia – a yet to be disclosed Land Rover model – which would help boost sales significantly in the region but also be exported. Complete Aluminium components would also be shipped back to JLR’s production facilities in the UK and around the world.

Jaguar Land Rover CEO Ralf Speth is keen to stress that the announcement shouldn’t be seen as moving production away from the UK but as strengthening the company as a whole. “The vehicle that could be made there was a never meant to be produced in the UK,“ Speth confirmed. “This is an opportunity to grow and to protect the UK. We’re doing our best for our employees and the company as a whole.”

The news about the Saudi Arabian venture follows JLR’s recent joint-venture announcement with Chery to build cars in China at a new factory near Shanghai, and the expansion of its assembly plant in Pune, India.

The ambitious expansion plans also follow a sharp increase in sales in emerging markets, which has contributed to a 32 per cent rise in global sales to 324,184 during the first 11 months of 2012 compared to 2011. In China alone sales have risen by 80 per cent year-on-year.