Britain says auto aid approved, welcomes bids

LONDON Thu Mar 12, 2009 9:37am IST

New cars are parked at Toyota's Burnaston plant near Derby, central England February 18, 2009.  Britain has received clearance from the European Commission to go ahead with its 2.3 billion pound ($3.18 billion) aid package to its ailing car industry and said it now welcomed applications for funds from manufacturers. REUTERS/Darren Staples

New cars are parked at Toyota's Burnaston plant near Derby, central England February 18, 2009. Britain has received clearance from the European Commission to go ahead with its 2.3 billion pound ($3.18 billion) aid package to its ailing car industry and said it now welcomed applications for funds from manufacturers.

Credit: Reuters/Darren Staples

Related Topics

LONDON (Reuters) - Britain has received clearance from the European Commission to go ahead with its 2.3 billion pound ($3.18 billion) aid package to its ailing car industry and said it now welcomed applications for funds from manufacturers.

Business Minister Ian Pearson said in a statement the government had laid out the criteria against which applications will be judged, and hoped the scheme would support struggling companies as quickly as possible.

The government also announced a separate 27 million pounds grant to Jaguar Land Rover to help it build a new, greener vehicle.

However, there was still some scepticism among industry members about the timing and availability of the cash.

Britain announced it would guarantee up to 2.3 billion pounds in loans to its car industry in January. New car sales have collapsed in the UK and around the world in recent months due to a slump in consumer demand and the unavailability of loans from banks.

The decline has already caused thousands of job losses in the UK, including 1,200 at Nissan and 850 at BMW (Mini) since the turn of the year while the British arm of Toyota Motor Corp said it was cutting staff pay and working hours by 10 percent on Wednesday.

Minister Pearson met representatives from manufacturers and suppliers at a meeting near parliament earlier on Wednesday.

"Today's event was an important opportunity for companies and banks to understand how to access the scheme. We have already received a number of expressions of interest, and we look forward to other companies coming forward shortly," he said.

UNREALISTIC

The government's department for Business, Enterprise and Regulatory Reform (BERR) confirmed on its website that the scheme was available to companies in the UK automotive sector and automotive sector supply chain, but meeting attendees said there were still clear obstacles to funding.

Erik Eberhardson, head of the management buyout team at struggling Russian owned van maker LDV, said a 10-day target to deliver funding was unrealistic.

"They have been told there is an ambitious target, which I think is good... for 10 days.

But realistically the civil servants tell us that it will take one to three months, and that it is probably not going to serve the purposes of most companies," he told BBC radio.

A consultant to the industry who was present at the meeting said the conditions were too dependent on specific projects.

"There is a certain amount of cynicism by some suppliers who want to know exactly how the money will be distributed. In order to be eligible, you have to be a reasonably solid company with a specific project," he told Reuters on condition of anonymity.

Industry body the Society of Motor Manufacturers and Traders (SMMT) declined to comment while it awaited feedback from the meeting.

The 27 million pounds of government support to Jaguar Land Rover is for the production of a new vehicle which the government claimed would be more environmentally friendly than the traditional Land Rover.

It said Jaguar Land Rover, owned by India's Tata Motors, is looking to invest 400 million pounds into the project and the added government support would help safeguard jobs.

Jaguar Land Rover cut 450 workers earlier this year.

(Additional reporting by Avril Ormsby)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Read 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage