Mandelson to unveil aid for car industry

01/27/2009 (2 h 25 m ago)

The government will step in to help the ailing car industry this afternoon. Lord Mandelson, the business secretary, will unveil the support to the House of Lords shortly after 3pm. It is expected to include a scheme to help potential car buyers get a loan and funding to give workers extra training. Car sales have plunged in recent months, as the deepening recession slashed demand for new vehicles. Many manufacturers have already cut production , putting their employees on three or four-day weeks or sending them on enforced leave. The 450 jobs cuts announced by Jaguar Land Rover earlier this month have added to the pressure on the prime minister to take action. Gordon Brown's spokesman said this morning that the package was meant to help the car industry through the economic crisis. "Lord Mandelson and the department have been making clear that, in our view, the car industry is a sector with a strong future," he said. "So not only are we in a position to provide some support to help them get through this difficult period but also, and this will be a very important part of the announcement, this is about how we provide the right support for them in the future." Environmental groups have said they would oppose the use of taxpayers' money to stimulate demand for private cars, arguing that greener initiatives such as public transport improvements should be supported instead. The prime minister's spokesman denied that the package amounted to a bail-out. Data released by the CBI this morning showed that motor traders have seen sales fall for the last eight months . The car industry has benefited from the ready supply of credit in recent years, which allowed it to offer attractive finance packages to potential customers. The credit crunch has put the squeeze on this practice. Figures released by moneyexpert.com showed that 300,000 motorists have been turned down for a car loan in the last six months. Several other countries are also considering intervening to help their domestic carmakers. Last week the French government said it would offer up to €6bn (£5.5bn), to avoid flagship names like Renault going under . In America, car part makers are now warning that they face bankruptcy, despite General Motors and Chrysler receiving billions of dollars in aid . Automotive industry Recession Economic policy Manufacturing sector guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds

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