Tata to 'bail out' JLR

The seemingly sudden news that Jaguar Land Rover (JLR) needs an immediate cash bailout from the UK Government has taken many by surprise, and led to fears that the UK car industry is heading the way of the American one.

But it seems a bailout will be unnecessary, as reports today (December 22nd, 2008) suggest that JLR will receive 'tens of millions' of pounds from its Indian owner, Tata Motors.

Reports involving JLR's cash flow issues have divided opinion, particularly as the maker is in the hands of a successful Indian firm, and a bail out would be seen as a step towards state ownership of a car maker. However, despite being coy about the amount of money it will give to JLR, Tata is not denying the report - despite refusing to say how much it will give.

And it's fortunate that the Tata injection is forthcoming, because business Secretary Lord Mandelson had thrown doubt on a Government bailout, saying that would only happen as a "last resort."

The Government is certainly involved in the future of JLR in some capacity, however, as Debasis Ray, Tata's head of corporate communications said: "Discussions with the government, however, are confidential and cannot be revealed. We have to run the company and are doing so to the best of our abilities."

Sources suggest that government ministers are discussing a £667m loan package for JLR in order to safeguard jobs in the wake of a dramatic sales slump. It is suggested by the UK Confederation of British Industry that the UK could see 800,000 jobs in the car making sector unless the Government comes to its aid immediately.

Meanwhile, American auto sector workers will sleep a little easier this Christmas after President Bush signed off a $17.4bn (£11.6bn) bailout for the Detroit Big Three makers.

Mark Nichol