LONDON (Reuters) -- Jaguar Land Rover has signed a contract to build some vehicles at Magna Steyr's plant in Austria, the UK automaker said today.
Magna Steyr will produce an unspecified number of JLR models in its Graz factory, which also makes Mercedes-Benz and Mini vehicles, because the automaker's three British plants are operating close to capacity.
JLR CEO Ralf Speth sought to reassure customers and workers in Britain that the company is staying loyal to its origins. "The UK remains at the center of our design, engineering and manufacturing capabilities. Partnerships such as this will complement our UK operations and engineering," he said.
A report said a Jaguar-badged subcompact SUV/crossover, called the E-Pace, will be built by Magna Steyr. The model would be positioned below the upcoming Jaguar F-Pace, which will be produced in JLR's factory in Solihull, England.
A JLR spokesman declined to comment on which model or models Magna Steyr will build, except to say that production will start after next year.
JLR built almost a third of the 1.53 million cars produced in the UK last year. The automaker was bought by India's Tata Motors from Ford Motor in 2008.
JLR is investing 3.6 billion pounds ($5.6 billion) on new vehicles and capital expenditure in 2015-16 as it expands its range and expands production outside the UK.
The company opened its first overseas manufacturing plant in China in October and is building a Brazilian plant in a bid to expand volumes and bring production closer to key markets.
Magna Steyr builds the Mercedes G class for Daimler, the Mini Countryman and Paceman for BMW and the Peugeot RCZ, according to the Automotive News Europe Guide to European Assembly Plants.
Magna Steyr is a subsidiary of Canada’s Magna International, the No. 2 global automotive supplier by sales after Robert Bosch.
Nick Gibbs contributed to this report