LONDON — Jaguar Land Rover is seeking government aid package to weather a collapse in car sales brought on by the coronavirus pandemic, reports said.
The U.K.-based automaker is in talks to borrow more than 1 billion pounds ($1.2 billion) through the British government’s emergency lending program, Bloomberg and Sky News reported, citing people familiar with the matter.
JLR is also seeking tax breaks, research grants and other subsidies, which could bring the total value of the state support to more than 2 billion pounds, one of the people told Bloomberg.
The full amount is still being negotiated and no decisions have been made, the person said.
JLR is seeking temporary state funding of “well over” 1 billion pounds, Sky News reported on Saturday. A JLR spokesman told Sky News that suggestions that the amount was as high as 2 billion “inaccurate and speculative.”
The automaker said it is in “regular discussion with government on a whole range of matters,” declining to provide specifics.
JLR was bought by India’s Tata Motors from Ford Motor in 2008. The automaker remains an emblem of Britain’s carmaking heritage, employing some 38,000 in the UK producing Jaguar sports cars and Land Rover SUVs.
Like other automakers, it has been burning through cash after health restrictions forced the closure of dealerships and factories to fight the virus’s spread.
Sky News, citing a company spokesman, said about 20,000 JLR employees had been furloughed under the British government’s emergency wage subsidy program.
JLR restarted operations on May 18 at its factories in Solihull, England, and Nitra, Slovakia. It said manufacturing will resume at its factory in Halewood, England, on June 8, starting with one shift.
Small pockets of business-critical activity are taking place at its third UK plant in Castle Bromwich to prepare for new model introductions, the company said.
JLR’s joint-venture plant with Chery Automotive in Changshu, China, has been operational since the middle of February.
In February, JLR shelved plans to issue a U.S dollar bond after investors demanded a higher interest rate to compensate for the risk the coronavirus poses, Bloomberg News reported then.
On May 1, rating agency Fitch downgraded its credit rating for the automaker, saying that “risks of the COVID-19 pandemic to both demand in JLR’s end-markets and disruption to operations has increased further.”
JLR is an important flagship for the Tata empire’s automaking operation. Analysts at CLSA said this month that Tata Motors is worth nothing without JLR.
Even as some factories start to reopen, there are questions about what demand will look like for luxury vehicles amid a brutal global recession.
Bloomberg and Reuters contributed to this report
For the latest news and updates, follow us on Google News. Also, if you like our efforts, consider sharing this story with your friends, this will encourage us to bring more exciting updates for you.