Jaguar Land Rover Seek Government Loan To Avert Crisis

The British marque seeks over £1 billion in government support packages amid COVID-19 woes

  • By: Leo
  • Sunday, 31 May 2020
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Jaguar Land Rover Seek Government Loan To Avert Crisis

COVID-19 has wreaked havoc on global industries with business closures and strict quarantines, and the automotive industry is no different. With IHS Markit research house forecasting a 22 per cent drop in global light vehicle sales, times aren’t great if you’re a car manufacturer. Jaguar Land Rover (JLR) is among the latest manufacturers to suffer from a slowdown in sales and has turned to the UK government for assistance. 

The British marques have always had a troubled history, littered with takeovers and near-bankruptcy scares. JLR seemed to have been saved when it was purchased by Indian automotive giant Tata Motors from Ford in 2008 in an all-cash transaction of $2.3 billion. Things started to look up for the company with a renaissance in design and technology, making both the Jaguar and Land Rover some of the most desirable badges on the road.

Although all seemed to be smooth sailing, Jaguars and Land Rovers are premium market cars with higher prices when compared to its German rivals. That, combined with upgrades that are not up to par, JLR has continued to be outsold by its competitors. And in current tough times, it has hurt them. The company suffered almost £3.1 billion losses in their fourth quarter, arising from a 31 per cent drop in sales just in the first three months of the year.  

SkyNews has reported that the company has been in discussions with the UK government on bespoke taxpayer support packages. However, a JLR spokesperson has indicated that suggestions of the amount going over £2 billion were “inaccurate and speculative”. JLR has been listed among the companies where taxpayers could take an equity stake as part of an extension to help prevent the collapse of key sectors in the UK.

The British carmaker employs 38,000 personnel for its operations. Still, approximately 20,000 have been furloughed during the lockdown period under the government’s emergency wage subsidy programme. 

However, it should be noted that that the company recently resumed production in its Solihull plant in Midlands on May 18th, with their Halewood factory is set to resume production on June 8th. JLR’s operations in China, on the other hand, returned to production mid-February after a brief shutdown period.  

Although the current state of discussions between JLR and the UK government is not clear, it can be speculated that the company’s request may not be going so well. 

Earlier this year, another struggling British motor company, McLaren, had their request for a £150 million loan snubbed by Whitehall, on the basis that McLaren had not sufficiently demonstrated that it had exhausted alternative sources of financing. 

The fact that JLR is owned by Tata further adds to the complexity of the case. 

Jaguar Land Rover aren’t the only vehicle manufacturers that are in trouble, as UK sales have dropped to their lowest level since post-WWII 1946. 

 “The government is in regular contact with the car manufacturing sector to assist them through this crisis.” said a government spokesperson to SkyNews.

“We recognise the challenges facing the industry as a result of coronavirus and firms can draw upon the unprecedented package of measures, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.”

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