Jaguar Land Rover, which some expected to set up a new assembly plant in North America, has instead set its sights on a location in Slovakia.
The move would offer the Indian-owned but British-based JLR the opportunity to not only expand production as sales surge but also sharply cut labor costs. It would become the latest in a growing list of assembly operations outside the UK for the luxury maker.
“With its established premium automotive industry, Slovakia is an attractive potential development opportunity for us,” says Ralf Speth, CEO of Jaguar Land Rover, in a statement. “The new factory will complement our existing facilities in the (United Kingdom), China, India and the one under construction in Brazil.”
Officially, JLR has just signed a letter of intent, but barring a last-minute hitch, the new plant in the city of Nitra is expected to open by 2018. It would be one of – if not the – most modern factories in the company’s production network and is expected to be able to handle a number of different Jaguar and Land Rover products.
It will focus on newer, aluminum-bodied models, rather than older steel products. Both Jaguar and Land Rover have been migrating over to the lightweight metal in recent years in a company-wide push to improve fuel economy.
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Apparently aware of a potential backlash from their home market, JLR officials made a point of emphasizing their commitment to the U.K., which a statement described as a “cornerstone” of its global operations. It has boosted British employment from 20,000 to 36,000 over the past five years, while investing over 11 billion British pounds, or $17.1 billion. Among other things, it has added a new engine plant and is preparing a new advanced engineering and design center.
“The expansion of our business globally is essential to support its long-term, resilient growth. As well as creating additional capacity, it allows us to invest in the development of more new vehicles and technologies, which supports jobs in the UK,” emphasized Speth.
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After suffering from a sharp drop in sales in the years before former parent sold the two brands to India’s Tata Motors, JLR has been experiencing a strong resurgence lately. Most of the growth has come on the Land Rover side from products like the Range Rover and Range Rover Evoq models.
But Jaguar is hoping to build momentum with an expanded portfolio that will soon add the new XE compact sedan, as well as the F-Pace, its first crossover-utility vehicle.
Like many other luxury makers, JLR has been setting up production operations around the world, including facilities in both China – soon expected to become the world’s largest luxury car market – and India, home of its parent and another fast-growing outlet for luxury brands.
But the U.S. remains its single-largest outlet for both the Jaguar and Land Rover lines. That led many to believe the company would add a plant somewhere in North America. Volvo even announced plans for a U.S. plant this year. Other companies have been expanding their base in Mexico, now one of the world’s largest automotive manufacturing sources. That country has several key advantages, including low labor costs and numerous free trade agreements.
Whether JLR might later take another look at North America remains to be seen.
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Slovakia? The Czechs must have turned them down.