- Factory in city of Nitra to have 150,000-vehicle capacity
- Slovakia won out over U.S., Mexico, other European countries
Jaguar Land Rover plans to spend 1 billion pounds ($1.5 billion) on a new car factory in Slovakia, expanding production capacity by about one-third to take on larger luxury-vehicle producers BMW AG and Mercedes-Benz.
The plant, in the western Slovak city of Nitra, will start operating in late 2018 with initial annual capacity of 150,000 vehicles and a workforce of about 2,800 people. That compares with Whitley, England-based Jaguar Land Rover’s deliveries last year of almost 462,700 vehicles. Construction is set to start next year, and the plant may eventually be expanded, the luxury-car unit of Mumbai-based Tata Motors Ltd. said Friday in a statement. Other sites were considered in the U.S., Mexico and elsewhere in Europe, it said.
“This is another important step in our globalization strategy” after “investing heavily” in the U.K., China and India and in a Brazilian factory scheduled to open next year, Chief Executive Officer Ralf Speth said in a speech in Bratislava, the Slovak capital, after signing an investment agreement with the government. “Slovakia’s established premium automotive industry and reputation for high-quality production makes this an excellent location for our next global manufacturing plant.”
Jaguar Land Rover’s sales last year rose 9 percent, and it’s adding more affordable cars, such as the Jaguar XE sedan and the Land Rover Discovery Sport SUV, to win buyers. Its high-end models like the Range Rover line are challenging sport utility vehicles that have pushed growth at BMW and Daimler AG’s Mercedes. The plant at Nitra will build a new range of aluminum vehicles, Jaguar Land Rover said, without specifying model types.
Slovakia has become an automotive hub in central Europe, hosting assembly plants by Volkswagen AG, PSA Peugeot Citroen and Kia Motors Corp. as well as parts suppliers such as Continental AG and Johnson Controls Inc. Auto manufacturing was the main driver of economic growth last decade in the former communist country of 5.4 million people, and it currently represents about a quarter of eastern euro-area nations’ exports, according to the Slovak Car Industry Association. The lobby group forecasts that Slovakian production will amount to almost 1 million vehicles this year.
The government pledged to provide aid of 130 million euros ($142 million) over four years starting in 2018 as the project is expected to create about 15,000 jobs, including those at suppliers, Slovak Economy Minister Vazil Hudak said at the signing event. Jaguar Land Rover may spend an additional 500 million euros should it choose to raise capacity at Nitra to 300,000 vehicles a year, he said.
Slovakia’s central bank estimates the factory’s construction will boost economic growth by 0.3 percentage point next year and 0.2 point in 2017, helping offset the effect of weaker foreign demand and a drop in public investment. Expansion will accelerate 0.8 percentage point once the plant starts production, the central bank said Tuesday.