Jaguar looks to UK government as crisis deepens

Jaguar Land Rover (JLR) is reportedly in secret talks with the British government for a £1 billion loan to shore up its operations in the wake of the current economic downturn.

The move comes 9 months after Tatas bought the luxury car maker in one of the most hi-profile takeovers by the Tata group. The deal had been financed by a £2 billion bridge loan from banks.

The request comes at a time when the downturn has already driven a number of big car manufacturers close to bankruptcy. The economic downturn has not impacted the car industry alone, a number of British industrial groups are also believed to be looking for financial support from the government.

What makes the scenario particularly grim is the sharp fall in sales of the Tata group's vehicles. Around the world, the market for JLR  has fallen 25 per cent, with fears that it could deteriorate. JLR has already effected cuts in shifts and production days at Solihull, Halewood and Castle Bromwich.

Car sales have plunged across the industry with the giants - Ford, General Motors, and Chrysler - fighting for  survival. GM, which owns Vauxhall, is almost bankrupt and will certainly collapse if the US government does not come out with a rescue package.
 
British car sales have plunged 25 per cent with potential buyers putting off new purchases in the turbulent conditions. This has forced the UK industry to go look to the government for handouts.

Ratan Tata, chairman, Tata group, has put further acquisitions on hold considering the difficulties in raising cash in  the economic slowdown.