Yahoo Finance Coronavirus: Speculation continues over Jaguar government rescue deal
Speculation continues to mount over a £1bn ($1.22bn) government rescue deal for Jaguar Land Rover (JLR).
The Sunday Times and Guardian have reported the carmaker has approached Whitehall for a support package as the COVID-19 pandemic has decimated sales.
Britain's biggest car manufacturer has been unable to access funds from the government’s corporate paper scheme, which is restricted to companies with an investment-grade credit rating.
Jaguar, which is owned by Indian conglomerate Tata, has reportedly been in emergency loan talks with ministers in the Department for Business, Energy and Industrial Strategy for several weeks.
The department has refused to comment directly and JLR will only confirm it is in regular discussion with the government "on a whole range of matters" which remain confidential. The company has also refuted the amount of money being sought is closer to £2bn, calling this figure “inaccurate and speculative”.
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JLR retail sales fell by more than 30% in the first three months of 2020 to 110,000 vehicles. The Midlands-based employer was forced to temporarily halt UK production as the coronavirus pandemic took hold, putting many workers on furlough.
But the company tentatively started up again last week by opening its Solihull factory.
Automotive industry analyst Tim Lawrence told the Guardian returning demand in China had encourage JLR to restart production: “Most carmakers are burning through large amounts of cash every day, primarily because of the cost of maintaining and running their operations, despite furloughing a lot of people.
“Demand in China is what’s encouraging JLR to restart production but they have to look at this in terms of the next one to two years, and models show demand is not going to come back to pre-pandemic levels."
