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Jaguar Land Rover in rescue talks after sales collapse

Jaguar Land Rover
Jaguar Land Rover

Jaguar Land Rover is reportedly seeking state support as car sales have collapsed under the lockdown.

The high-end car maker could need more than £1bn of aid, Sky News reported, to help it bridge the slump in sales.

Factories have gone back to work, but showrooms have yet to reopen meaning manufacturers face growing costs but limited revenues.

Those loans could come in a form which convert into an ownership stake if they are not repaid, leaving the Government as a key owner of the industrial group, alongside Indian investors Tata.

Support packages on offer so far have not reached the business, as they are designed for small and mid-sized firms, or larger companies with investment-grade credit ratings, which JLR lacks.

What loans are on offer to help businesses survive coronavirus?
What loans are on offer to help businesses survive coronavirus?

This, along with potential investments in other companies, could lead the Treasury to become a major investor in swathes of Britain's businesses, in a repeat of the purchases of bank shares during the financial crisis.

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One goal could be to sell the shares at a profit in years to come once the economy has recovered.

However the example of RBS shows this is not always possible. The taxpayer remains a majority shareholder in the bank with no prospect of a profitable sale any time soon, as the shares are still trading at a price far below the level at which the Government intervened.

Another option is to use the ownership stakes to influence the management of the businesses, as a direct industrial strategy, though the Government would be investing to save the companies and jobs rather than because it has expertise or specific plans in those industries.

JLR said: "We are in regular discussion with government on a whole range of matters and the content of our private discussions remains confidential," adding that the suggestion it requires up to £2bn of support "is inaccurate and speculative."

A Government spokesperson said: “The Government is in regular contact with the car manufacturing sector to assist them through this crisis.

“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.”