JAGUAR Land Rover could suffer the same fate as MG Rover unless it gets a vital research and development loan quickly.
This stark warning came from motor industry expert, Professor David Bailey, of Coventry Business School, after JLR announced it had made a loss of £281 million in just ten months.
The company is still trying to get the Government to approve a £350 million loan from the European Investment Bank for research and development.
Prof Bailey said he was confident JLR would survive the economic downturn, but the question was: in what state?
“If it falls behind in research and development it damages the firm, and ultimately that’s what killed off MG Rover,” he said.
“It will get through the recession, but it’s no good if it’s too small. Longer term it really depends on how well the products sell and what new products there are. The lack of research and development at MG Rover was a huge issue.
“It’s got to be sorted out pretty quickly too, a deal has got to be put in place by the end of the summer.”
The European loan for R&D has to be backed by the Government, but it and JLR’s Indian owner, Tata Motors, have yet to agree on the details of the guarantee.
And despite Business Secretary Lord Mandelson setting up the £2.3 billion Automotive Assistance Programme in March, the Government has not yet released any money to carmakers.
Meanwhile, Tata has announced it would be taking “a number of urgent and long-term measures” to stem profit losses at its subsidiaries.
Vice-chairman Ravi Kant said: “There have already been 2,000 job losses. We may be looking at more losses and more plant shutdowns.”