Jaguar Land Rover's proposal to build a Chinese assembly plant has won approval from China's Ministry of Environmental Protection, according to the ministry.
The Indian-owned luxury automaker formed a joint venture in May with Chery Automobile to build a 12 billion yuan ($1.9 billion) assembly plant in Changshu in east China's Jiangsu province.
The plant will produce up to 130,000 vehicles a year.
Now that it has met environmental requirements, the joint venture must receive approval from the National Reform and Development Commission, China's central economic agency.
The deal, which was first reported by Chinese media last year, marks Jaguar Land Rover's latest effort to expand its appeal in the world's largest auto market where luxury sedans and SUVs remain in hot demand even as the overall car market cools. JLR had previously explored joint venture deals with other Chinese partners, including Great Wall Motor, but made little headway.
With a Chinese assembly plant, Jaguar and Land Rover hope to challenge Audi, BMW and Mercedes, which dominate China's luxury segment.
Last year, Land Rover sales in China jumped 68 percent to 34,993 units, while Jaguar sales soared 58 percent to 3,897 units, according to LMC Automotive. All of those vehicles were imported.