- Title: SAUDI ARABIA: Jaguar Land Rover considers Saudi Arabia plant
- Date: 11th December 2012
- Summary: VARIOUS OF ATTENDEES WATCHING A FILM ABOUT THE HISTORY OF JAGUAR LAND ROVER FILM ON SCREEN
- Embargoed: 26th December 2012 12:00
- Location: Saudi Arabia
- Country: Saudi Arabia
- Topics: Business,Industry
- Reuters ID: LVAHJH2AFFAVUBQ05CWESBISNRF
- Story Text: 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 India's 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 company has signed a preliminary deal to manufacture 50,000 Land Rover vehicles per year at a plant in Saudi Arabia, the country's commerce and industry ministry said in a statement, with investment of 4.5 billion riyals ($1.2 billion).
''The Kingdom imports 110 billion riyals of cars annually, more than 600 thousand cars are imported with this amount of money, or the equivalent of 1 percent of the production of cars in the world, and there is a growth rate equal to 6 percent per year, and this rate is encouraging for us to build an auto industry in the Kingdom and this is what we are working on,'' Saudi Minister of Commerce and Industry Tawfiq Al-Rabee'a said at a news conference in Riyadh on Tuesday (December 11) after signing the letter of intent.
"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 chief executive officer Ralf Speth did not confirm the investment figures. The company said in a statement it had signed a letter of intent to explore the possibility of setting up facilities in the country.
The proposed plant, which will assemble four-wheel-drive Land Rover vehicles, will likely start up in 2017 and be located in Yanbu on the kingdom's Red Sea coast, said Azzam Shalabi, head of the Saudi commerce and industry ministry's industrial clusters programme.
"We aim to have 100 percent Saudi workers working in the factory, from this point we will see how we can train the Saudis to get to the highest level in the shortest amount of time, on the condition that we have a quality production and at the same time that we have qualified people to manage the factory," Azzam Shalabi added.
Saudi Arabia, which does not have an existing automotive industry, is seeking to develop local industry to diversify its economy away from oil exports, leveraging its abundant natural resources and low electricity prices.
JLR, which began construction of a factory in China last month, said in the statement on Tuesday that it had already identified opportunities for aluminium component production in the country.
British manufacturing facilities will not lose jobs to any new Saudi plant, Speth said in Riyadh.
"What I really would like to highlight: that's not going against any jobs in the UK. In addition, if we can grow, that will deliver additional jobs in the UK because at the most we can stabilize the company all around the world - and you see what is happening at the moment, especially in Europe. The more we can stabilize the company around the world, the more solid, the more protected are our jobs in the UK. And that's I guess very very important," Ralf Speth said.
Outgoing chairman of the $100 billion Tata Group Ratan Tata told a magazine in September that Tata Motors was looking using local aluminium production in Saudi Arabia, where Saudi Arabian Mining Co (Maaden) and Alcoa Inc are building a smelter scheduled to start production next year.
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