JLR to build new car factory in Eastern Europe

Luxury carmaker Jaguar Land Rover, which has its engine plant at Wolverhampton, is planning to build a new car plant in Slovakia.

It has signed a letter of intent with the country's Government and is carrying out a feasibility study for a factory in the western Slovak town of Nitra with the aim of reaching an annual output of up to 300,000 cars over the decade from 2018.

A final decision will be made later this year by JLR, which saw sales and pre-tax profits fall in the first three months of its current financial year.

JLR chief executive Dr Ralf Speth said: ""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.

"With its established premium automotive industry, Slovakia is an attractive potential development opportunity for us. The new factory will complement our existing facilities in the UK, China, India and the one under construction in Brazil."

Prime Minister Robert Fico said he was committed to boosting the country's premium car sector and would work closely with Jaguar Land Rover to ensure the plant is built in Slovakia.

The West Midlands-based car company said it had also looked at other sites in Europe – one thought to be in Poland – as well as in the United States and Mexico before choosing Slovakia.

JLR is currently facing a slowdown in car sales in China, where the economy is struggling after years of strong growth. Total sales were down to £5bn from £5.35bn and pre-tax profit slipped from £924m to £638m for the last quarter.

But the Slovakia move underlines the company's commitment to growth, as it aims to become a major global manufacturer with a broader range of cars. Its smaller sports saloon, the XE, has already sold nearly 3,000 cars since it was launched last month, while its F-Pace crossover will be launched a the Frankfurt Motor Show next month.

Nearly all the new and updated versions of its cars include models that use its Ingenium four-cylinder diesel engine, made at the £500m factory on the i54, on the outskirts of Wolverhampton. Employment at the site has already reached 1,000 and could start approaching 1,600 after it starts making petrol engines next year.

Plans have been submitted to South Staffordshire Council for a further factory on the site, of around 900,000 sq ft, although JLR is currently being tight-lipped about what will be made there.

But increasing production around the world will mean JLR needs to keep expanding production of its engines to keep up.