Jaguar Land Rover (JLR) is studying the potential of setting up an automotive facility in Saudi Arabia, the luxury car maker said, as the country's commerce ministry said it has signed a $1.2 billion preliminary deal with the British company.
JLR, owned by Tata Motors, has seen huge demand over the past year from emerging markets such as China, Russia and countries in the Middle East for its luxury SUVs and sleek sedans, offsetting sluggish growth in developed markets.
The car maker has signed a preliminary deal with Saudi Arabia to manufacture 50,000 Land Rover vehicles per year in the kingdom, a statement from the country's commerce and industry ministry said, investing 4.5 billion riyals.
"This is purely exploratory," a spokesman for JLR said of the company's plans when asked by Reuters about the investment figures provided by Saudi Arabia, adding that it was too early to provide details.
JLR, which began construction of a factory in China last month, said in a statement on Tuesday issued minutes before the Saudi statement that it had already identified opportunities for aluminium component production in the country.
The British car maker expects to announce further plans in Saudi Arabia next year, it said, adding that levels of investment had not been discussed in detail and the discussions were at "a preliminary stage."
"We are committed to further international partnerships to meet record demand for our highly sought after vehicles," Ralf Speth, JLR chief executive officer said in the statement. "If we proceed, it will complement our existing expansion in the UK and elsewhere."
The factory will start up in 2017 in either the Jubail or Yanbu industrial cities, the Saudi Arabian statement said. Saudi Arabia is seeking to develop local industry to diversify its economy away from oil exports.
Copyright: Thomson Reuters 2012