Jaguar In Discreet Meetings With UK Government To Receive $1.48 Billion In Rescue Aid

November 24, 2008 9:40 a.m. EST

London, UK (AHN) - Jaguar Land Rover (JLR), a London-based automaker, is reportedly in discreet talks with the British government to get 1 billion pounds ($1.48 billion), following a takeover by an India-based conglomerate, a report said.

The luxury carmaker has been struggling due to the global slowdown on vehicle sales, which is already forcing the U.S.-based Detroit Big Three carmakers to consider for bankruptcy.

The on-going financial crisis and depleting cash reserves are forcing the car makers across the world to shut down plants in some places and slow down production in other plants to cut operating expenses.

The Sunday Times newspaper citing a un-named government official familiar with the matter, said that Prime Minister Gordon Brown is studying the request and an answer could be made in the next fortnight.

The news emerged just nine months after the Indian conglomerate, Tata, bought the luxury car marque for $2.3 billion and financed the acquisition with a $3 billion (2 billion pounds) bridging loan.

"The speed of the economic decline has not just hit the motor industry," the Times said. "A number of large British-based industrial groups are also considering asking the government for financial support. If help is not given tens of thousands of jobs are at stake."

According to the report, Chief Executive of JLR David Smith has made a direct plea to the government for cash. "He believes that with help being given on the Continent and in America to carmakers, Britain has a good case for financial aid," it said.

The Society of Motor Manufacturers and Traders, which represent wider interest in the British industry, has reportedly asked the UK government to provide up to 3 billion pounds in a rescue loan.

"Tata is looking to the government for a bridging loan to help it over the next 24 months, a period where the industry will come under further financial pressure when it is difficult to access funding markets," the Times report said.

In 2007, Land Rover produced 230,000 vehicles, and Jaguar manufactured 54,000. But the sales of the company has dropped by 25 percent as consumer demand has steadily declined over the last 12 months.