Jaguar Land Rover will begin building vehicles in China within two years in an attempt to strengthen its position in a growing luxury car market and reduce production costs.

Jaguar Land Rover and Tata CEO, Carl-Peter Forster, confirmed Land Rovers would be the first to roll off Chinese assembly lines, with the view to produce as many as 40,000 vehicles when both brands are up and running.

“We will need to manufacture at least two models in China,” Mr Forster told BBC News. “We’ll take one to two years to set it up, but first we will need a partner.”

Despite the company’s eastern expansion, Mr Forster rejected suggestions that the announcement was the beginning of European exodus.

“[China and India will] never be the centre for Jaguar Land Rover, it will remain in the UK. Most of the volume growth will benefit the UK operations,” he said.

Around 1000 extra staff will be employed this year to help with production of the Land Rover LRX, although Mr Forster admitted that the closure of either the Castle Bromwich or Solihull factories was still expected in the short- to medium-term.

“We are talking about having one efficient operation rather than two inefficient operations. We are not necessarily talking about getting rid of people.”

Jaguar Land Rover’s UK workforce was cut from 18,500 to 16,000 in 2009.

Over the past 12 months, around eight percent of Jaguar Land Rover’s sales have been in China. Land Rover sales increased by 55 percent in China while Jaguar sales were up 38 percent.

Tata’s native India was another growth market for the luxury duo, and is expected to perform even better from 2011 when Land Rover begins local production.

(with BBC News)