Jaguar may build a second crossover at Magna Steyr that would be larger than the F-Pace shown here.

Its own manufacturing capacity stretched to the limits, Jaguar Land Rover will turn to a contract manufacturer Magna Steyr to build a new crossover vehicle for the Jaguar brand.

Based in Graz, Austria, Magna Steyr has produced vehicles for a wide variety of manufacturers and brands over the years, a list currently including Mercedes-Benz, Peugeot and Mini. For Jaguar, the new partnership will create additional capacity needed to support future growth plans, according to Ralf Speth, JLR’s chief executive officer.

“The UK remains at the center of our design, engineering and manufacturing capabilities,” Speth stressed, adding that, “Partnerships such as this will complement our UK operations and engineering.”

The announcement comes as both Jaguar and Land Rover move to expand their product portfolios. The SUV side of the Indian-owned automaker now plans to set up three distinct “families” of products. Meanwhile, Jaguar plans to expand beyond its traditional focus on passenger cars, starting with the upcoming launch of its new F-Pace utility vehicle.

The Magna Steyr plant produces a number of brand's products, including the Mercedes G-Class.

“This agreement will allow us to expand our award-winning model range as customers around the world demand ever-more innovative vehicles from Jaguar Land Rover,” Speth said.

JLR officials didn’t specify which vehicle will be built by Magna in Graz. One possibility is the proposed Jaguar J-Pace utility vehicle that has surfaced in the past couple of months. The J-Pace is a three-row utility due in 2019 and would follow the launch of the smaller F-Pace into the utility vehicle market.

Magna Steyr has plenty of experience building luxury vehicles including high-line utility vehicles. Mercedes-Benz recently confirmed Magna Steyr will continue building the big G-Wagon SUV until 2022. The engineering and manufacturing operation helped Mercedes develop its increasingly popular 4Matic all-wheel-drive system.

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Meanwhile, Magna Steyr recently built its 1 millionth vehicle for BMW.

“The signing of this contract with Jaguar Land Rover reflects the trust in our capability and heritage as a vehicle contract manufacturer,” said Günther Apfalter, President Magna Steyr and Magna International Europe. “The partnership with Jaguar Land Rover brings a new customer to our Graz plant. As always, we will work with our fullest commitment and dedication to ensure that we meet our customers’ high expectations.”

With plans already in place to take Jaguar Land Rover’s three vehicle manufacturing plants in the UK close to their operating capacity, the collaboration with Magna Steyr is something of a necessity, Speth said.

Over the past five years, Jaguar Land Rover has doubled sales to more than 462,000 vehicles, doubled employment to more than 35,000 people and invested more than $15 billion on new product creation and on the capital expenditures required to build new vehicles.

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During this time, the company has invested heavily in its UK vehicle manufacturing facilities at Castle Bromwich, Halewood and Solihull to support the introduction of 10 all-new vehicles, including the Jaguar XE, Jaguar F-Type, Range Rover Evoque and Land Rover Discovery Sport.

Jaguar Land Rover is also bolstering its international manufacturing presence with the opening of a joint venture factory in China and the construction of a new plant in Brazil set to open next year.

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