Luxury car marque Jaguar Land Rover (JLR) is in secret talks with the UK government for a £1-billion loan and an answer to the request would be made in the next fortnight, a media report said here.
“JLR is in secret talks with the government for a one billion-pound loan, just nine months after the Tatas, the Indian conglomerate, bought the luxury car marque,” The Sunday Times reported today.
Tata is looking to the government for a bridging loan to help it over the next 24 months, a period in which the industry will come under further financial pressure when it is difficult to access funding markets, the report added.
The economic downturn has hit the auto industry hard and at present a number of large UK-based industrial groups are also considering asking the government for financial support.
Quoting people familiar with the approach made by JLR, The Sunday Times said “Gordon Brown is studying the request and an answer could be made in the next fortnight.”
“Tata still has confidence in the future of JLR, but believes he needs government help to tide it over for the next two years,” the daily said.
Business Standard adds: When contacted, a Tata Motors spokesperson declined to comment on the report.
The Sunday Times further added that “David Smith, the chief executive of JLR, has made a direct plea to the government for cash. He believes that with help being given on the continent and in America to carmakers, Britain has a good case for financial aid.”
“The group, which employs 15,000 workers in the UK, needs to slow production in order to sell a backlog of vehicles that have already come off the production line. Last year, Land Rover produced 230,000 vehicles, while Jaguar made 54,000,” the newspaper said.
Quoting analysts the report said the the market for JLR cars has fallen 25 per cent around the world and analysts fear this could further deteriorate.
JLR has already cut shifts and production days at Solihull, Halewood and Castle Bromwich.
For JLR, its need for additional finance, just months after it found a new owner, marks the start of another turbulent chapter in the group’s history, the report said.
The Society of Motor Manufacturers and Traders, which is representing the interests of the wider British industry, is thought to want between £2 billion and £3 billion of state aid.
Meanwhile, Toyota has also cut shifts at its UK plants, and Bentley, the luxury carmaker majority-owned by Volkswagen of Germany, has cut shifts at its plant in Crewe.
“The request demonstrates the sharp downturn in the global car market, which has already pushed a handful of the big car manufacturers to the edge of bankruptcy,” the newspaper said.
The Tata group paid $2.3 billion for JLR and financed the acquisition with a $3 billion bridge loan. However, since the acquisition sales of new cars have plunged.
