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Jaguar Land Rover is reported to be seeking a £1bn emergency loan from the UK government as sales of the company’s vehicles continue to drop.

According to reports over the weekend, JLR is said to have already submitted the request, and the Government could make a decision on whether to back the company within two weeks.

JLR’s CEO, David Smith, has already publicly suggested that UK car manufacturers should get government support to help them through the economic downturn.
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I know this will seem harsh - especially if you work for JLR directly or indirectly - but we can't keep bailing out companies that are struggling. For the greater good of society and not being lumbered with high taxes for the next 30 years we need to let companies downsize and even fail.

NAK:

I know this will seem harsh - especially if you work for JLR directly or indirectly - but we can't keep bailing out companies that are struggling. For the greater good of society and not being lumbered with high taxes for the next 30 years we need to let companies downsize and even fail.

You are completely correct.  I realise that JLR is a large concern but how many companies is the government expected to prop up?  Land Rover this week, DFS the next?

As hard as it may be, we have to let nature take it's course!

How exactly are JLR directly seeking a £1 billion loan from the government ?

They are supporting (like every other manufacturer with UK facilities) the SMMT and ACEA request for government intervention to improve liquidity within the supply chain and investment support in driving forward carbon reducing technologies. In short - if the government decide to offer loans where most other forms of credit have dried up then all manufacturers will be interested - not just the ones perceived to be struggling.

Similarly this :

" Unless we introduce further measures to reignite the UK economy, there is significant risk," he said in October, after meeting Gordon Brown to discuss the state of the UK car industry. "

Is not a request for an emergency loan - it's simply a statement of fact that if the economy continues to go *** up, we won't sell any bloody cars.

What the hell is going on at JLR? Less than six months ago JLR/Tata were making announcements on several hundred millions of pounds being invested in JLR, in the aftermath of the takeover. Then there was the story of 600 graduate engineers to be recruited quickly to beef up the R&D. Then just last Friday, there was the announcement by Advantage West Midlands, the govt. quango, that AWM and Land Rover were spending £80m (£30/50m respectively) on a new development centre in Warwick!

http://www.birminghampost.net/birmingham-business/birmingham-business-news/automotive-business/2008/11/21/awm-pledges-80m-to-develop-green-technologies-in-auto-industry-65233-22307579/

Now, over the space of a weekend, JLR/Tata want a billion pounds of taxpayers' money to keep them afloat and prevent the need to sack thousands of workers. Like I say what the hell gives at JLR?

My guess is that David Smith and Ravi Kant, Smith's boss at Tata Motors, have made an almight balls-up of running JLR, since the takeover. How can a company be entering into a contract with a govt. body for a not insubstantial £80m on the Friday and then on the Sunday be secretly demanding £1bn from the same govt, albeit in Whitehall, not the West Midlands? The UK govt. is clowning around here too. If Whitehall officials knew that Ravi Kant was looking for a massive bailout last week what the hell was the AWM head bod doing signing away tens of millions of taxpayers' money to an company that is almost certainly trading insolvently? Isn't that a criminal offence, on both sides?

Separately, have you considered that the EU Commission may have an interest in this 'loan'? It is state subsidy, and as such almost certainly contravenes EU single market law. Would not be surprised if BMW, Mercedes and others are already preparing to submit a complaint to either Neelie Kroes, the Competiton commissioner or Charlie McCreevy who looks after the internal market. Would be poetic justice for VW Group if they were to complain to Mr McCreevy about an imperfect market as McCreevy has nearly crucifed VW with, as he sees it, their anti-competitive VW Law, where the state govt,, Lower Saxony, can block major changes with its 20% shareholding in VW. Would expect Mandelson to be doing ovetime with his ex Commission colleagues to prevent any investigation of unfair state subsidy to JLR by the UK taxpayer getting off the ground. After all he is not averse to helping out rich Indian businessmen with their affairs, as the past has shown. 

And what do you make of this lastly? More corporate BS or if taken at face value, Tata Motors must have cash, so why the plea for a UK bailout?!?

http://www.coventrytelegraph.net/news/coventry-news/2008/11/24/move-to-create-7-000-jobs-at-ansty-92746-22326008/

Chips:

How exactly are JLR directly seeking a £1 billion loan from the government ?

They are supporting (like every other manufacturer with UK facilities) the SMMT and ACEA request for government intervention to improve liquidity within the supply chain and investment support in driving forward carbon reducing technologies. In short - if the government decide to offer loans where most other forms of credit have dried up then all manufacturers will be interested - not just the ones perceived to be struggling.

- No. Autocar have failed in this report to reference the original article, which appeared in the Sunday Times yesterday, as a scoop. Suggest you read it first and then comment.

http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article5213217.ece

I saw the article in The Times yesterday and my comments remain the same. It's rather premature to assume that the management at JLR have ballsed up based on a comment from an unnamed government minister (assuming one existed at all)

Not every manufacturer has signed up to the SMMT's begging letter to Number 10. As I understand it, some (including Honda) did not support the SMMT's request. There has been over supply in the car market for decades, but whenever a big player gets stuck, its national government is expected to keep them running.

It's understandable  - no-one really wants to lose a manufacturing base - but it has artificially maintained too many players in the market, and the crunch has brought it all to a head. JLR's product range is entirely wrong for the current market conditions, they haven't planned for this scenario and can't change quickly enough. Casualties are inevitable (see Rover), but should we expect better prepared manufacturers (those who have invested in efficient technology and their brands, like VW Group, BMW, Honda & Toyota) to fall in with the players that are pleading for emergency help?

In contrast, as I understand it, Honda has never taken a government penny anywhere in the world (something to do with Soichiro Honda not getting any help when he wanted to diversify from bikes into cars, so he vowed that Honda would always be 'fiercely independent') which I don't think Nissan in Sunderland can claim, nor possibly Toyota in Burnaston or Deeside(?).

It seems Honda's response now is to stop building cars they can't sell for a couple of months, but keep its employees on and prepare for a better future (get ready for new Jazz and, although I don't think it will be built in the UK, the new Insight hybrid - cars that people actually want). The Detroit 3 and others seem to still be churning out cars no-one wants and piling up a problem until the cash runs dry. Something has to give.

Nationalise it.  Freeze development on all models. No facelifts. spend the money saved on advertising and bribing the worlds motoring press. 

NobbyUK:

It seems Honda's response now is to stop building cars they can't sell for a couple of months, but keep its employees on and prepare for a better future

I believe that the Honda approach must the right one, why keep on building cars merely to stockpile them in a field or on a dealer's forcourt and eventually sell at a big discount or at a loss ? Unless car manufacturers make the cars that people want to buy, then they must suffer the consequences just like any other business; however, I can see the sense in government making LOANS available if the banking system will not or can not at present, but they must only be loans for as short a period as possible. If companies like GM want loans, then they should be told that the money is only for development and marketing of cars like the new Volt that have a future, not to allow them to continue to make huge SUVs and pick-ups etc with 6.1lt engines that do 12mpg at best.

JLR have been guilty of the worst kind of short termism in their product planning during the boom years - what would you like sir, a big gas guzzling car? Or a big gas guzzling car with a hastily bolted on supercharger? It's difficult to see what any loan would achieve. What they really need is a model that you can drive without waiting green protesters egging you at the end of your drive and there is nothing this side of 2011.

W124:

bribing the worlds motoring press

...Pardon?