JLR Goes For Bailout Round Two

Jaguar Land Rover has asked the European Investment Bank for up to £281 million in emergency funding – this comes after their workers have agreed to pay freezes and a four-day work week and after they received an order from China for 13,000 vehicles. Are things really that bad?

By now you know all about the UK Government's £2.3 billion car bailout plan, where manufacturers can apply for loans of up to £1.3bn from the European Investment Bank, as well as a further £1bn from the UK Government to help fund greener vehicles. (JLR has just received over £37 million to build the futuristic LRX shown here.)

Still, JLR says they need more, and Business Secretary Lord Mandelson is considering a second installment of rescue funds.

And he’s not the only one who is concerned. The European Parliament has just weighed in on the crisis, where sales have declined now for 10 consecutive months, with 2.3 million (-15.3%) fewer new passenger cars and commercial vehicles registered from May 2008 to February 2009 than the same period last year.

"The Parliament underlines that the financial and economic crisis causes serious problems and that the automotive industry is particularly hard hit. The Parliament puts its full political weight behind support measures from European institutions and governments and stresses that urgency is key", says Ivan Hodac, secretary general of the vehicle manufacturers' trade association ACEA, of which JLR is a member.

The European Parliament is calling on all EU member states to:

• Increase the lending capacity of the European Investment Bank
• Speed up and simplify access to credit
• Coordinate fleet renewal measures throughout the EU
• Support measures to retain a high-skilled workforce
• Facilitate and sustain high levels of R&D
• Ensure a balanced and fair trade agreement with South-Korea
• Scrutinize new regulatory proposals to ensure competitiveness

“The European automobile industry is essential to the EU economy. It is the engine of the manufacturing industries, one of the biggest employers in Europe, the largest investor in innovation and R&D, and a formidable export force", says Hodac.

He said a mouthful. Consider how many small and medium sized companies involved in the supply chain, vehicle sales and after-sales services are affected by this downward trending spiral. And vehicle production is forecast to decline by 25% in 2009.

Maybe things really are that bad just now after all? Not so fast! GM's stock shares have more than doubled in the past two weeks - up from their seventy-year low! - and Form's stock is up 50%! Pete Kelly, a forecaster with JD Power and Associates said "The majority of the world light vehicle market is probably bottoming out. The question is how long until we get an improvement?"

How long, indeed.