JLR may partly relocate production from the UK to beat Chinese tariffs

Jaguar Land Rover could move some production to developing markets such as Russia, China and Brazil to avoid import tariffs on British products by the Chinese government.

The Birmingham Post today said JLR CEO David Smith, speaking at a fringe meeting of business leaders to discuss the future of British manufacturing at the Conservative Party conference in Manchester yesterday, said that JLR must shift some production overseas to avoid import tariffs set by the Chinese government.

China imposes a 10-per cent tariff on imported auto parts, but since April 2005, it has imposed a higher 25-per cent charge if they account for 60 per cent or more of the finished product's value.

It also slaps a 25-per cent tariff on the import of finished automobiles. But it has no problems if foreign car companies want to set up manufacturing facilities in China.

JLR sells more of its vehicles overseas than in the UK market.

In Februaury this year, a Chinese trade delegation to Europe signed a life-saving deal worth £600 million with JLR to purchase13,000 vehicles over the next three years. (See: China bails out JLR with £600-million order)