Jaguar Land Rover Eyeing Expansion Into Saudi Arabia

Jaguar Land Rover is looking to build an assembly plant in Saudi Arabia at a reported cost of up to £1 billion ($1.6 billion).

The U.K. luxury auto maker owned by India’s Tata, has signed a letter of intent with the Saudi National Industrial Clusters Development Program and is studying the feasibility of setting up the facility.

JLR says the Saudi government has expressed its intention to initiate, develop and support the automotive industry and sees the auto maker as a potential partner to help strengthen its industrialization plans.

“We are committed to further international partnerships to meet record demand for our highly sought-after vehicles,” CEO Ralf Speth says in a statement.

“The Kingdom of Saudi Arabia is an attractive potential development option, complementing our existing advanced facilities in Britain and recent manufacturing plans to expand in other countries, including India and China.”

The auto maker says discussions with the Saudi government are at a preliminary stage, but it already has identified opportunities in aluminum-component production, an area where JLR has established a leadership position.

The world’s largest integrated aluminum complex, a joint venture between Saudi Arabian Mining and Alcoa of the U.S., is due to begin production in 2014 at the Ras Al Khair industrial community.

JLR has pioneered aluminum-body development in the premium-car segment, using lightweight metals for its Jaguar XJ model and the all-new Range Rover, the first luxury SUV with an all-aluminum monocoque body structure.

The talks on potential investment in Saudi Arabia follow JLR’s recently announced JV with Chinese auto maker Chery to manufacture vehicles at a new plant near Shanghai, and the expansion of assembly operations at the U.K. car company’s plant in Pune, India.

JLR reported a 32% increase in global deliveries to 324,184 units in the 11 months through November. Sales in the Middle East and North Africa rose more than 9% to 11,418.

The auto maker says it may announce further plans for the Saudi project next year. The parties have not yet discussed issues such as level of investment, potential capacity and job creation in detail.

“This is an exciting project that could enable Jaguar Land Rover to establish a joint-venture partnership in a part of the world where luxury-vehicle sales are expected to rise,” Speth says. “If we proceed, it will complement our existing expansion in the U.K. and elsewhere.”