UK's £2.3 billion auto aid inadequate

29 January 2009

The UK auto industry says busines secretary Lord Mandelson's £2.3-billion car industry aid package, announced yesterday (See: Britain unveils £2.3 billion loan for car industry), a damp squib, as the package imposes a ceiling of £250 million on a range starting from just £5 million for each car manufacturer.

At a meeting held yesterday by Lord Mandelson with car manufacturers and union leaders to detail the £2.3-billion aid package announced yesterday, industry and union leader were given the grim news about the ceiling on the already low aid given to the auto sector, compared to what other governments in Europe have given their car industry.

Car manufacturers did initially welcome the aid with muted response, but labour union Unite had said the aid was a massive disappointment as it was seeking £13 billion for car manufacturers and hundreds of component companies, rather than the woefully short £2.3-billion aid package.

With 27 car and commercial vehicle manufacturers in the UK producing 1.75 million cars and commercial vehicles each year The UK auto industry has a combined annual turnover of £51 billion. How far the £2.3 billion can be is going to stretch is beyond imagination, say critics of Lord Mandelson of the package.

JLR, which alone had asked £1 billion in short-term funding, refused to comment on the ceiling imposed by the government but said that it was prudent that the commercial credit be made available as soon as possible (See: UK loan package to benefit Tata's Jaguar-Land Rover) 

Joe Greenwell, president of Society of Motor Manufacturers and Traders (SMMT) and a vice-president of Ford in Europe, said that the government's help was good but it should hasten the availability of credit in real time and the process should be swift and productive.''