British premium carmaker Jaguar Land Rover said on Friday that it had entered into agreements with banks in China for a three-year revolving loan of 5 billion yuan ($704.5 million) to help finance its strategy of making the country one of its global centers.
The lenders are Bank of China; Industrial and Commercial Bank of China; China Construction Bank; Bank of Communications as well as Shanghai Pudong Development Bank.
Arthur Yu, Jaguar Land Rover’s vice-president and chief financial officer of its China operations, said the loan marks the carmaker’s first debt financing in the country since its arrival in 2010.
He said the loan can help the company better manage cash flow amid the coronavirus pandemic.
It will also help finance the carmaker’s goal of turning China into a global center for sales and production, research and development, as well as procurement.
“We have a big plan in China this year and the Chinese market is recovering gradually, so financially we should be ready,” said Yu.
China plays an important part in the British carmaker’s global network.
Sales from China used to account for 25-30 percent of its global sales. But over the past two months it made up 50 percent, Yu said. Jaguar Land Rover set up a joint venture with China’s Chery Automobile in 2012. The manufacturing facility, located in Changshu, Jiangsu province, produces five models under the Jaguar and Land Rover brands as well as its Ingenium engines.
From 2017, the carmaker started to increase investment in research and development in China, Yu said. Looking forward, he said the carmaker may join hands with Chinese internet companies in terms of new energy vehicles and autonomous driving. In terms of sales and marketing efficiency, Jaguar Land Rover said it is continuing its plan codenamed Dragon. Initiated in 2019, it has worked well.
The carmaker’s sales saw double-digit growth for months in a row until the pandemic broke out in January. Now dealers’ inventories have fallen to around 1.5 months’ worth of stock, better than the industry’s average.
As the coronavirus has come under control in China, Yu said the carmaker’s sales are recovering. Deliveries in April were level with same period of 2019 and sales were growing in May.
Yu said the company expects sales in China’s luxury car segment in 2020 to be level with 2019 or see slight growth.
“There are still a number of uncertainties going on, including the pandemic as well as the global economy’s effect on China, so we are cautiously optimistic. In the long run, though, we are very confident in the Chinese market.”