Jaguar Land Rover says Slovakia plant will start production in 2018

BRATISLAVA -- Jaguar Land Rover said today it will start production in 2018 at a new 1 billion pound ($1.5 billion) factory in Slovakia.

The plant will have an initial capacity of 150,000 vehicles and construction will start in 2016, the UK automaker said in a statement.

CEO Ralf Speth said in the statement that the factory "marks the next step in the company’s strategy to become a truly global business."

JLR, which Ford Motor sold to India's Tata Motors in 2008 for $2.3 billion, is expanding out of its UK home base as it seeks to boost its global sales, which last year amounted to 462,678 vehicles, comprising 381,108 Land Rover models and 81,570 Jaguars. After opening a factory in China last year, JLR will start output at a Brazilian plant next year.

The company did not disclose which models it plans to build in Slovakia. The factory will produce a range of all-new aluminum Jaguar Land Rover vehicles, the statement said.

The company expects the first cars will come off the production line in late 2018.

JLR signed a letter of intent for the factory with the Slovakian government in August. The company picked the country over locations in the UK, U.S., Mexico and Poland because of its strong supply chain and good infrastructure.

The factory will be located in Nitra, western Slovakia.

Slovakia has become a major automotive manufacturing center in recent years. Volkswagen Group builds models including the VW Touareg and Audi Q7 at its Bratislava plant. Kia produced more than 300,000 vehicles in Zilina last year while PSA/Peugeot-Citroen's facility in Trnava made more than 255,000 vehicles last year.

The VW and PSA plants are less than 62 miles from Nitra while Zilina is less than 125 miles away.

JLR may increase annual production at the Nitra factory to 300,000 units after a further feasibility study.

State aid

The Slovak government said it approved 130 million euros in state aid for the project, which helps Prime Minster Robert Fico project an image of strong economic management ahead of elections in March.

The car industry represents 43 percent of Slovakia's industrial output and a quarter of its exports, according to the Automotive Industry Association, which expects the country of 5.4 million to make almost 1 million cars this year.

Economy Minister Vazil Hudak said the JLR factory would create 12,000 jobs in supplier industries in addition to 2,800 at the factory. The central bank expects it may add 0.3 percentage points to economic growth next year, and 0.8 percent once production launches.

Hudak said JLR would invest 1.4 billion euros through 2021, when capacity should reach 150,000 cars. A further 500 million would raise capacity to the maximum 300,000.

Reuters contributed to this report