Car dealer Inchcape and manufacturer Nissan tap government for millions in emergency loans

Time 1 year ago

Car dealership group Inchcape and Japanese car firm Nissan have benefited from multi-million-pound taxpayer-backed loans.

In a list of the firms that received coronavirus loans cash from the Bank of England, several automotive industry businesses were revealed to have tapped up cash.

Nissan – which has a factory in Sunderland – borrowed £600m, more than double that of troubled airline British Airways.


Dealer group Inchcape borrowed £100m as it was named as one of the 53 businesses that had borrowed a total of £16.25bn under the scheme.

Coronavirus loan scheme: amounts borrowed. See story CITY Loans. Infographic PA Graphics. An editable version of this graphic is available if required. Please contact [email protected]

Toyota Financial Services (UK) plc (£365m), Honda Finance Europe plc (£75m) and Alliance Automotive Investment Limited (£20m) were among the other car industry businesses that borrowed cash.

The biggest single loan – £1bn – went to German company BASF, the world’s largest chemicals producer.

The Bank of England’s Covid Corporate Financing Facility (CCFF) was set up to help larger businesses with credit scores through the pandemic.

It complements three other loan support schemes, where the loans are provided by high street lenders, and guaranteed by the government.

Mike Jones, chairman of motor trade accountancy firm ASE Global, pointed out these numbers didn’t include the billions rumoured to be under discussion between Jaguar Land Rover and the government.

He added: ‘The government’s loan schemes have proved a vital lifeline for both automotive manufacturers and retailers. 

‘The practical pausing of the industry for more than two months caused significant losses in spite of the government’s furlough scheme. 

‘Some retailers, both large and small, have taken advantage of the cheap government loans to also amass a war chest of available funds expecting there to be acquisition opportunities as we emerge from the crisis.’

Paul Daly, audit partner at chartered accounts UHY Hacker Young, told Car Dealer Magazine: ‘In some ways, it is reassuring to see such a proportion of the loans being taken by automotive businesses, given the very stringent “investment grade” qualifying criteria for these loans.

‘The Bank of England is clearly comfortable with the financial strength and resilience of these companies.

‘The reason why the loans are required will depend on each company’s circumstances, but underpinning their requests will undoubtedly be a prudent approach to cash management and preservation.’

He highlighted the fact that two of the businesses – Toyota Financial Services and Honda Finance Europe – represented the finance arms of manufacturers and called it ‘a clear signal of concerns regarding collections from cash-strapped consumers and businesses, compounded by the three-month payment holiday that the government has mandated consumers be allowed’.

Daly added: ‘In the case of Nissan, the amounts advanced are significant and likely linked to the significant manufacturing base in Sunderland, particularly given the recent commitment to ongoing production and investment at that facility.

‘Overall, I think these loans simply show that automotive-related companies are being understandably prudent with their treasury functions during this crisis and using their financial strength to raise additional funds on a cost-effective basis.’

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Even before the list was published, Dame Margaret Hodge, a Labour MP and former chairwoman of the public accounts committee, had called on the government to publish even more data on other loan schemes.

She also said the government shouldn’t lend to companies that might not be paying their fair share of tax.

‘While for many these schemes will be a financial lifeline, for unscrupulous corporations they will be viewed as easy pickings,’ she wrote in a letter to chancellor Rishi Sunak.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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