Jaguar Land Rover may open a new plant in eastern Europe sooner than in the United States. The Indian-owned carmaker has reportedly drawn up a shortlist of four host countries in the region: Poland, Slovakia, the Czech Republic and Hungary.
“They’re just seeing who’s going to offer them the best deal,” an unnamed source familiar with the matter toldThe Financial Times. Jaguar Land Rover has two overseas plants in China and India, with a third one currently being built in Brazil. There have also been reports about plans for a new facility in North America.
A new plant in eastern Europe would mark a shift in strategy for JLR though. While the plants in China, India and Brazil are intended to bring production close to JLR’s big sales markets, a production facility in eastern Europe is about reducing costs.
“It’s just cheap labour. There’s no geographical reason behind it. People in Poland and Hungary don’t buy Jaguar Land Rover cars,” said the same source.
JLR currently has three car production sites in the UK and a new engine facility. Two of the car plants (Halewood and Solihull) are running at full capacity, while the third (Castle Bromwich) has just received a £400m ($619 million) investment as it prepares to build the new Jaguar XF.
JLR built about 460,000 vehicles last year and aims to increase production to 500,000 in 2015. However, the automaker is very far from the big three German premium carmakers (Audi, BMW and Mercedes-Benz), which have annual outputs of around 2 million cars a year. To reduce the gap, Jaguar Land Rover needs more production facilities, with the plant in eastern Europe expected to add at least 250,000 units a year.