Jaguar, Land Rover in talks over UK govt loan

Luxury British car brands Jaguar Land Rover are in talks with the government over a possible £1bn (€1.1bn) loan, it was reported today.

The news comes just months after the firms were bought by Tata, India’s biggest vehicle maker, from Ford for £1.7bn (€2bn).

It is thought Jaguar Land Rover, which employs around 15,000 workers in the UK, has been hit by the economic downturn, which has battered carmakers across the globe.

The Sunday Times reported that Gordon Brown was considering the proposal and an answer could be made in a couple of weeks.

A spokesman for Jaguar Land Rover said the company would not comment on “speculation on the content of confidential discussions with Government”.

“The automotive industry is facing unprecedented trading conditions as a direct fall out of the banking crisis and turbulence in financial markets and we are of course keeping government appraised of the impact on our business,” he said.

“Jaguar Land Rover supports both the UK and the European industry position that Government intervention is required to improve liquidity in the supply chain and support continued investment in carbon reduction technology as well as stimulating consumer demand.

“The French, German, US, Australian and Chinese are all considering industry support packages.”

A Business, Enterprise and Regulatory Reform (BERR) spokeswoman said she could not comment on individual cases.

“The Government clearly can see that these are unprecedented times for the global economy and for the global automotive sector,” she said.

“Lord Mandelson will be meeting representatives of the UK automotive and retail motor sector this week to discuss where Government action can help.”

Sales of Land Rover are down for this year in line with most other car firms although sales of Jaguars, helped by the success of the new Jaguar XF, have increased.

The company said that due to the impact on demand for cars caused by the wider economic downturn it was “prudent” to extend the voluntary redundancy programme to hourly paid workers involved in manufacturing and product development.

Last week, Japanese car giant Honda announced it will halt production at its UK plant in Swindon for two months next year.

Honda’s plant at Swindon will not produce any cars next February or March, although none of the 4,800 workers will be laid off despite the company reporting a “dramatic change” in the global market.

New Society of Motor Manufacturers and Traders (SMMT) figures show total car production fell by 25% in the UK last month, the lowest October level since 1991, while commercial vehicle building slumped by 41%.

The SMMT predicted further reductions in the coming months as firms scaled back production in response to falling demand.