Birmingham’s Post newspaper sent its business editor to meet with Jaguar MD David Smith, who said the company is struggling simply through the shortage of short-term finance.
He therefore wants the Government to provide short-term loans or loan guarantees. This will give it the cash required to progress through the current economic downturn.
Such loans have already been discussed, it is said. Jaguar Land Rover could receive £1 billion in commercial loans or Government loan guarantees.
It is the collapse in financial and consumer confidence that is the root cause of the current recession, says Smith. The paper says he pinpoints Lehman Brothers going under as the tipping point.
‘We, our suppliers and our dealers are all suffering from cash problems,’ he said, ‘essentially because the banks aren’t lending properly to the sector.
‘So, we have said either we need to find ways to free up commercial lending, or the state may have to put loan guarantees in place to allow some of that lending to flow.’
Significantly, dealers would benefit. JLR had asked for car dealers to be included in any package. These funds would be used to help potential customers raise the money needed to buy a new car.
‘Again, that is something we have seen in other countries, but which the UK Government hasn’t so far done.’
Smith revealed that JLR had quickly cut production. By the end of 2008, factories were running at half the level they were at the start.
‘That will continue probably through Easter, as we adjust inventories to demand.’
But dealers can expect more economical cars in the future. Smith said that Jaguar turns over £7 billion. This is a bit less than Marks & Spencer’s – but JLR is spending 4 times what M&S does on environmental innovation.
By Richard Aucock