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Jaguar Land Rover in Nitra

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Jaguar Land Rover has reached an agreement to set up shop in Nitra, the Slovakian home of the flying car. The UK-based carmaker on Friday confirmed plans to set up a £1bn factory in central Europe – a facility that will become its third overseas assembly plant, underlining the company’s rapid growth under Indian ownership, reports Andy Sharman, Motor Industry Correspondent.

The plant will employ 2,800 workers and build a range of all-new aluminium vehicles. The FT has previously reported that the replacement for the cherished Land Rover Defender 4×4 is likely to be produced at the factory, though the Discovery Sport SUV will be one of the first models off production lines.

JLR opened its first overseas factory outside Shanghai in October last year and has begun building a plant in Brazil. The Slovak plant will start construction next year and have an initial capacity of 150,000 vehicles.

The central European country has rapidly expanded as an automotive export hub and its factories made 179 vehicles per 1,000 citizens in 2014. That compares with 73 in Germany, 37 in the US and 28 in France. In recent years Slovakia has staged a rapid shift towards upmarket cars. AeroMobil, which is based in Nitra, is developing what could be the first commercial flying car.

Slovakia beat stiff competition from rival countries such as the United States, Mexico and near neighbour Poland – as the FT reported in this analysis last month.

Ralf Speth, JLR’s chief executive, said:

Slovakia has an established premium automotive sector, which represents 43 per cent of the country’s overall industry. It has more than 300 suppliers in close proximity and an excellent logistics infrastructure; this confirmed our decision that this country was the ideal location.

Friday’s announcement follows the signing of an agreement by Mr Speth and Robert Fico, Slovak prime minister, in Bratislava.

JLR’s expansion has made it one of the UK’s largest exporters and its workforce has doubled since 2010. But the new plant in low-cost central Europe has sparked fears in some quarters that the company’s commitment to its British base could be waning.

Mr Speth said:

The heart of our company will always be in the UK, where our design, technology and manufacturing capabilities are based. It is our creativity and innovation which makes Jaguar Land Rover the leading boutique automotive brand, offering exceptional products for our customers.

After five years of stellar growth, JLR has come unstuck this year and suffered the worst effects of the slowdown in China. Sales in the country – a hugely important market for JLR and once its biggest sales region – fell by almost 32 per cent in the July-September period.

But successive announcements – including expansion at its new Wolverhampton engine plant and a possible entry into the Formula E race series – have put the focus back on the company’s rapid expansion as it tries to catch up with its German premium rivals: Audi, BMW and Mercedes-Benz.

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