British automobile company Jaguar Land Rover (JLR), owned by Tata Motors of India, and China's Chery Automobile have agreed to a joint venture for production of Jaguar and Land Rover cars in China, the BBC reported Wednesday.

A new, jointly-owned company will be formed, with a view to also establish a research and development facility.

"Demand for Jaguar and Land Rover vehicles continues to increase significantly in China," JLR's chief executive Ralf Speth and Chery's chief executive Yin Tongyao said in a joint statement, according to the BBC.

China's state-run Chery Automobile predominantly makes smaller, less luxurious cars than JLR, but has good knowledge of the Chinese market.