F&I Management & Training

If you’re reading this article, there is a damn good chance you have a vested interest in the success of the Motor Industry.

I hope you would all agree therefore that we have to admit to our failings as a sector, and, as well as the main structural failing, i.e. the fragmentation of the industry, I think it would be a fair comment that generally speaking we could probably organise a p*** up in a brewery, but that we would most likely wait until we got to the brewery before we made any firm arrangements.

OK so I could have said we are pretty pants at being proactive, or even better I could just have said ‘as an industry we are reactive’ but the first paragraph was much more fun to write, and I hope may even raise a smile in these brow beaten times.

So what if ‘Darling and Brown’ do give the industry a leg up, and come to the party armed with scrappage vouchers as per our German cousins? Have you given any thought as to how you will incorporate these into your sales process, what about F&I, add-ons, retail marketing & offers, and all that palaver?

What I am asking you to do may seem a little ‘out there’, to plan what you will do if something does happen, rather than “what are you going to do now it’s happened?” If this scheme is given the go-ahead, and I resolutely believe it will, then those businesses that have a clear plan of how to deal with it will maximise the opportunity with marketing, support, training and optimum customer reassurance.

It is they that will end up doing more deals, selling more metal, making more money and delivering energy and momentum into their dealerships for many months.

Those dealers that don’t plan for change such as this will answer customers reactively with umms and errs, and won’t deliver that reassurance that customers need to take the plunge and make a buying decision.

There will be a whole new raft of people coming into showrooms, people who have never really dealt at showroom level before, but have typically stayed on the fringes of private sales. We will start to see the Dennis & Doris’s of this world coming out of their Vauxhall Viva / Simca 1100 / Hillman Imp (delete where appropriate) and going into cars from the 21st century.

It is our responsibility to ensure that these people and their needs are catered for properly, that our front line sales execs are fully versed on how to deal these opportunities, and the rest of the dealership on how the process pans out. But most importantly, these people represent a golden opportunity for the professional sale of add-ons, maximising the opportunity to profit.

But bear in mind that they may have no understanding of the ancillaries available to them via a typical (and relatively sophisticated) auto business, and thus may need more than just a simple cuddle through the pipeline of your sales process.

You will need to train your people to take time, explain and educate even the most basic principles. An intro to the service department will be mandatory, as their understanding of service may have been a dry Sunday, a Haynes manual and a bag of spanners.

Everything from the initial walk in to the vehicle handover will need to be slower, and more thorough – and your people will need to know this, otherwise (and as I have said to many hundreds of delegates over the years ), it is far easier for a customer to say “No”, than for them to say “I don’t understand, please explain”.

‘No’ doesn’t make any of us any richer

DATED: 11.04.09

FEED: PTL

I remember poking fun at my old dad back in the early seventies, when he didn’t realise the meaning of the word Gay had fundamentally changed to mean something else entirely from what he understood. I think we have a similar problem right now with the phrase ‘sub-prime’

Most asset funders are owned by the Banks, who are risk averse to the extreme, after having bought into high-risk high-yield sub prime mortgage and investment packages that they didn’t understand. Tempted by exceptional (but fictional) profits their decision making process got hazy, their risk radar went offline and they paid good money for bad paper.

Those of us that have a grounding in the Motor Industry will understand what I mean when I allude to the ‘white flagger’, the poor sap that buys every ancillary product known, and as they do so, the experienced Business Managers heart sinks, because they just know that the customer is going to be bounced from every funders underwriting team. In fact, if you listen closely, you may even hear them giggle a little on the phone when you’re asking for a credit acceptance. Not easy to swallow when the times are tough and deals are hard won.

There is an opportunity here, for our asset funders to wake up, to sense the chance and to grasp the nettle of sub-prime lending.
As the economy twists and turns like any good fairground ride, redundancies will occur, which in turn will create non-prime customers. This is happening right now.

So why is it that we are losing our specialist non-prime lenders? Lets consider BCT – writing business without paying commissions, but still writing good volumes at rates which should be banking up substantial provisions for the lender. This may seem like a great model, but kills off a good proportion of the business stream. Brokers can’t afford to pass deals that earn them nothing, and we as an industry will lose that panel skillset if we’re not careful.
The Funding Corporation, Blue, and of course Welcome are some of those that will be removed from the Motor Finance landscape in the coming weeks & months, along with the others, and that’s a shame.

I have a website, www.fundacar.co.uk which dealers and customers alike utilise to propose deals to a non-prime funding panel. In the last three months I have seen the number of proposals double through the site, the number of lenders on the panel fall, and those funders on the panel get more and more fussy and pick over what they will and won’t approve.

I can’t and won’t apportion blame to any one funder, neither can I criticise them for taking the opportunity of cherry picking the best ‘below the line’ deals, but I will stress the importance of their duty to that market.

It is your duty Mr. Sub Prime funder, you have an obligation to pass the message up the line, to speak to the board of your wholesale funders, to explain to them that asset backed and secure UK based sub prime funding for motor has got sod all to do with billions of dollars worth of toxic sub prime mortgage lending.

Sub-prime has a double meaning; to us in the industry it means a real customer, with a real need, who has a blemished history, not a pre-destined future. To the Banks that fund those specialist lending arms, sub prime probably means ‘that bloody great financial catastrophe that we would rather bury quickly and never add to our balance sheet again’

I am afraid that even the big Banks have a duty here, your inability to feed LIBOR and the inter bank markets is causing the failure of business, which is eroding market confidence, slowing spending, stalling economic resolve, and creating more sub-prime customers on a daily basis.

It seems funny now that such a little phrase can carry such a different meaning, and how easily each can be misinterpreted. The industry needs providers of good sub-prime funding; otherwise the food chain breaks down, the model stalls, and the whole UK automotive market suffers.

So come on, understand the part you Banks have to play in this industry, acknowledge that your poor decisions and losses on “Sub-Prime US Mortgages and Securitised Packages” has no bearing whatsoever on “Sub-Prime UK Motor Loans”, but be mindful that your caution on money into the markets for the last 20 months has created an even greater market for good sub-prime motor finance.

You created the opportunity, now help to resolve it, and turn a profit in the process.

DATED: 11.04.09

FEED: PTL

Many of you on the list will know that my Operations Director – Richard Palmer, has decided to leave the fold and set up his own sole trader business, which he has called Estadia.

Please don’t panic, this has been in the planning now for a long time, and Richard and I are still working very closely on a number of projects, and with a number of clients.

Both businesses have committed to working closely together in the future, and we are talking just as much as we ever did before – so the corporate divorce lawyers won’t be taking an earn out of this little change in status.

Richard has some great ideas and opportunities outside the Motor Industry, and his energy and enthusiasm will, I have no doubt, give him success in that arena. I want Profit Training to stay focussed in Motor – so hard luck, you lot are all still stuck with me.

If anyone has any questions, please feel free to get in touch, but in the meantime its business as usual, but with two company names instead of just one!

DATED: 11.04.09

FEED: PTL

The media have made a great fuss in the last few months, that now is a great time to buy a car, but they’ve done F&I no favours at all.

The message that is going out is, ‘If you have the cash, now is the time to buy’

A great way to generate footfall, but it is also sweating out of suburbian semis those conservative types that have saved up.

Yes, Savers, those poor unfortunates that have adjusted their lifestyles to below that of their earnings, those that have sacrificed family holidays to Disney and replaced it with a trip to the caravan in North Wales, those that have a wedge of cash that is now sitting in Panic Stricken Bank PLC earning fourpence ha’penny a month.

So, here we are with our customers, they have a lump saved, and they are in the showroom ready to spend – I can guarantee you they really don’t want to spend it, but the time has come to replace their “Old Faithful” ( read: rusty old smoker worth nowt ) with a new, bright and shiny, gleaming model with more than four forward gears and an integral CD thingummy.

The ONLY reason they’re here is they believe the time is right for them to get the BEST deal out of you, and they believe that entails them spending their chunk. It is down to you to persuade them otherwise – but the traditional methods based on rate for rate just don’t work any more.

We used to do comparisons on a cash conversion, compounded interest on savings – against simple flat annualised interest over the life of the loan – and don’t mention the F word, Finance, it brings savers out in a rash !

Thing is, we can’t do that calculation right now, as savings rates are on the floor – we need to look at an alternative, and to do that we need to understand why customers save.

Security. There, I said it.

The essence of a cash conversion to dealer funding is no longer about the hidden cost of the lost interest on their money, nor is it about the aspects of the CCA that many dealers have exploited over the last few years ( halves and thirds anyone?) no, its about the significance of that lump of money sat in the Bank.


Your customer needs to replace their old smoker with a new(er) one, check.
They know that now is the best time to buy, check
They still don’t want to spend that lump, considering all the compromise and sacrifice putting it there in the first place, check.

Affirm that now is a great time to buy metal, but reassure them that its also a great time to buy money too; The rates are fixed for the life of the lend, they have the protection of the CCA / DPA / FSA et al., and they get to protect some of their investment too, just in case.

We don’t know what’s around the corner financially for them or for us, but we do know the ride hasn’t finished just yet.

DATED: 11.04.09

FEED: PTL

It is reported that General Motors, which owns Vauxhall, is on the brink of going bust and is in 'earnest' preparations to file for bankruptcy. The move puts thousands of jobs at risk at Vauxhall. GM bosses want to split the company in two - a 'new' company made up of the most successful units, and an 'old' one of its less profitable ones. The plan is said to be 'gaining momentum' and is seen as the most sensible configuration, according to sources. Analysts say that filing for Chapter 11 bankruptcy in the United States will give GM a degree of protection and a breathing space from creditors as it restructures. GM chief executive Fritz Henderson has said that the company would prefer to restructure out of court but could go to court if needed.

DATED: 09.04.09

FEED: AW

Prime Minister Gordon Brown has promised an environmentally friendly Budget on April 22 to kick start a 'green recovery' - including the mass introduction of electric cars on Britain's roads. In an exclusive interview with The Independent, the Prime Minister trailed measures to make Britain a world leader in producing and exporting electric cars, hybrid petrol-electric vehicles and lighter cars using less petrol. Chancellor of the Exchequer Alistair Darling will announce in his Budget that trials for electric cars in two or three cities will begin next year. Mr Brown also said he would consider buying a fleet of electric cars for ministers to set an example. Councils will be invited to bid to become Britain's first 'green cities' and the Government will open talks with power companies to ensure the vehicles can have their batteries recharged at a national network of power points at the roadside. Pledging a raft of measures to ensure Britain emerges from the recession as a low carbon economy, the Prime Minister said the country could increase its output of environmental goods and services by 50 per cent to £1.5 billion in the next few years. He said: "This is a major part of our plan for recovery in the Budget." He added that the Government would provide incentives to help the car industry become a market leader across the world for electric and hybrid cars.

DATED: 09.04.09

FEED: AW

New cars are currently cheaper than used ones for the first time in the UK, according to a comprehensive guide to UK car prices. Heavy discounting of new cars and rising prices of second-hand cars due to a shortage of supply have led to this bizarre situation. Parker's says this is first time used cars have commanded a premium since it started collecting price data in 1972. However, Parker's warns that this price reversal will not last long. 'Shifting stock' The recession in the UK has led to a dramatic fall in demand for new cars, so carmakers are having to slash prices to entice customers to buy. Indeed, figures out on Monday showed that car sales plunged more than 30% in March, compared with a year earlier. At the same time, a shortage of good quality used cars has seen second-hand car prices rise significantly since the start of this year. "Price cuts on new cars designed to shift stock, and big discounts from car supermarkets, mean that the price of selected new, pre-registered cars can be the same and, in some cases, even lower than one-year-old used cars with several thousand miles on the clock," Parker's said. Price rises For example, it has found a 2008 Vauxhall Corsa 1.0 litre with 5,160 miles on the clock for £6,494. A new, pre-registered 2009 version is available from one dealer for £5,995, a saving of £500. But normality should return to car prices before long, Parker's added. As stocks of new cars are reduced, deals will soon dry up, it said. And imminent price rises for new cars will also have an impact. "New car prices are set to go up, as a number of manufacturers are raising the list price of their cars to improve their margins, despite new sales continuing to slump," Parker's explained. Ford are set to increase prices by 3.75%, Seat by 3.5% and Nissan by 3.4%, it said.

DATED: 09.04.09

FEED: AW

Pendragon has sold its Evans Halshaw Ford dealership in Goole, East Yorkshire to dealer group Stoneacre.

The Yorkshire-based company, which has 20 dealerships across north England, will continue to primarily sell Fords but will also sell Vauxhalls and a variety of used motors.

Lee Jagger, general manager of the Goole site, said the acquisition was Stoneacres’ first Ford dealership. “We wanted to expand into Ford and Goole provided the perfect opportunity and location to do that,” said Jagger.

Evan Halshaw’s existing staff has been retained by Stoneacre.

DATED: 09.04.09

FEED: AM

LDV must secure funding from a private investor before it can benefit from any money from the European Investment Bank (EIB).
LDV applied for an European Investment bank (EIB) loan in January but has told employees via its blog that it can’t access funds until the future of the company is secure.
The EIB fund, which released £710m to Nissan and Jaguar Land Rover’s UK operations, can only be used to invest in low carbon technology and not an immediate crisis of working capital shortage within a company.
LDV said: “It is however positive to see how quickly the applications for JLR and Nissan have been processed and this gives further confidence in the business case for investors in LDV, that additional funds for development of LDV's world leading low carbon vehicles, could be made available quickly through this route.”

DATED: 09.04.09

FEED: AM

Labels: Delayed Drafts

Bank of England Maintains Bank Rate at 0.5% and continues with £75 Billion Asset Purchase Programme.

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with the programme, announced on 5 March, of asset purchases totalling £75 billion financed by the issuance of central bank reserves.

Bank of England maintains Bank Rate at 0.5%

DATED: 09.04.09

FEED: BoE

Saab, the struggling carmaker that is being cut adrift by parent company General Motors, says more than 20 'active parties' are interested in buying it. A deal could be completed in June. Meanwhile, a Swedish court has given Saab more time to restructure in bankruptcy as it seeks an investor. Saab filed for creditor protection on February 20 and now can continue its reorganisation until May 20, after which it can apply for another three-month extension. The manufacturer says it needs to secure $1 billion of financing to remain liquid and see four new models to market. GM says that it is willing to contribute $400 million of that amount in kind, and has applied for the remaining $600m from the European Investment Bank. Saab plans to introduce the four new cars over the next 18 months and achieve positive cash flow in 2011, by which time it said it would be selling 150,000 cars. Saab sold just over 93,000 vehicles last year and says it needs to make 130,000 to break even.

DATED: 08.04.09

FEED: AW

Germany has tripled the size of its car-scrapping scheme, which rewards trading in old cars for new ones. The government will raise its budget from 1.5bn to 5bn euros ($6.6bn; £4.5bn), aiming to cover up to two million cars instead of 600,000. The scheme has been very popular, driving German car sales to their highest level for 10 years last month. But the news came as parts firm Karmann became Germany's biggest car company to fall victim to the economic crisis. Karmann, which specialised in car bodies and built the classic Volkswagen Karmann Ghia two-seater convertible, filed for insolvency on Wednesday, according to a court in the north-western city of Osnabrueck. Another car parts firm, Schaeffler Group, which has been burdened with debt since taking over rival Continental earlier this year, announced on Tuesday that it had secured a 1bn-euro credit line from its banks. Exports blow Under the car-scrapping scheme, German consumers are paid 2,500 euros for turning in a car which is at least nine years old in exchange for one no more than one year old. German Chancellor Angela Merkel's spokesman Ulrich Wilhelm said the scheme was being expanded "in view of the strong demand". The government has previously said it will expire at the end of the year. Critics of the scheme have alleged that instead of boosting economic demand, it merely redistributes it, as consumers spend money on cars that they would otherwise have spent on other items. "Now people are buying more cars, but fewer sofas or flat-screen televisions," Wolfgang Franz, head of the government's independent panel of economic advisers, told ZDF television. The German car industry, like those in other countries across the world, has been struggling to cope with a dramatic slump in sales during the economic downturn. Germany's overall economic health took another knock on Wednesday, with the release of figures showing the country's exports had fallen for the fifth month in a row. Exports in February were a record 23.1% lower than in the same month a year earlier, said the Federal Statistics Office.

DATED: 08.04.09

FEED: AW

Global car markets could take five years or more to return to pre-recession levels, according to industry experts. Meanwhile, Professor Garel Rhys, of Cardiff Business School, said that if the UK new car market continued to decline at current rates, sales could fall to only 1.4 million vehicles by the end of the year. Following March's 30.5 per cent drop in registrations, the Society of Motor Manufacturers and Traders is predicting 2009 sales will total 1.7m. Professor Rhys says that he does not expect recovery in the UK and world markets to start properly until 2011 and that full recovery would not come until 2013, at the earliest. He also warned that the speed of the recovery in the car industry would depend on the pace of economic recovery. In the United States it took the industry 20 years to recover from the Great Depression. Howard Wheeldon, a strategist with BGC Partners, said: "It's highly unlikely we will see the levels of 2006-7 reached any time in the next five years. It depends a bit on what governments do with incentives, although that will be an artificial impact. But for the near-term, people will be most concerned with whether they have a job."

DATED: 08.04.09

FEED: AW

German coachbuilder and convertible specialist Karmann filed for insolvency on Wednesday.

The company said it was forced to take the move because it might not be able to meet pending financial obligations.

Karmann makes roof systems, body structures and convertible top systems. The company assembled Audi A4 and Mercedes CLK-class convertibles until shortly before the insolvency application.

DATED: 08.04.09

FEED: ANE

SCRAPPAGE will be given the green light in the budget on 22 April, PM Gordon Brown hints today.
He has said in a headline interview with The Independent newspaper that the Government is looking at a £2000 new car scrap scheme.
This is part of his desire to make Britain a ‘world leader’ in green vehicle production and technology, says the paper.
The focus of the new car scrap scheme would be taking older, highly polluting cars off the road. They would be replaced with newer eco-friendly models, the significant part of this statement is the ‘newer’ comment, rather than ‘brand new’.
This means the scheme will probably be extended to nearly new cars, too. The extent of this broader coverage remains to be confirmed.
UK car plants have already benefitted from green investment - yesterday, Jaguar Land Rover and Nissan received grants from the European Investment Bank, to help finance the production of green future models.
This is something the PM wants to see extended, creating up to 400,000 jobs in ‘green industries’ over the next five years. He wants Britain to become a ‘world leader’ in green cars.
It will extend to much wider support of fully electric cars to, including the development of a national network of roadside car recharge power points.
Trials of electric cars in cities will also commence next year, says the paper.
Plans are bold and far reaching. But the first step is an imposition of a new car scrap scheme.
This, it seems, could now be a matter of weeks away.

DATED: 08.04.09

FEED: CDM

The European Investment Bank is expected to approve significant funding for two car makers in Britain, Jaguar Land Rover and Nissan, later. Jaguar Land Rover has applied for around £270m to invest in research and technologies to develop more environmentally friendly cars. Nissan and its sister plant in Spain are seeking around £360m to produce more fuel efficient, cleaner engines. The moves come as the car industry has been hit globally by a slump in sales. When it is distributed, this funding is set to be the first money provided to any car maker in the UK since the financial crisis began. Under EIB rules, any loan requires that car makers must invest in new technology to lower emissions during vehicle production and driving. The EIB loans are expected to require some form of guarantee from the UK government, before any money is paid. The board of the EIB - the lending arm of the European Union - is debating the topic at a meeting in Luxembourg. Slowing industry Figures released on Monday illustrated the gloomy state of the sector. UK car sales dropped 30.5% in March, compared with the same month a year earlier, according to the Society of Motor Manufacturers and Traders (SMMT). The industry argues that help is needed immediately for car makers to ensure they can survive the recession. Business Secretary Lord Mandelson has set aside £2.3bn in support for the car industry, mostly in the form of loan guarantees as well as direct aid to car makers.

DATED: 07.04.09

FEED: AW

The US carmaker Ford has seen its shares rise 16% in New York, after saying it had cut $9.9bn (£6.7bn) from its $25.8bn debt. The 38% debt reduction will reduce Ford's interest payments by more than $500m a year. It said the move, along with previous agreements with the United Auto Workers (UAW) union, would "substantially strengthen Ford's balance sheet". Shares in the firm closed 52 cents higher at $3.77. 'Strong positive' "As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth," said Ford chief executive Alan Mulally in a statement. Ford is the only one of the big three US carmakers that has not taken government bail-out money to enable it to continue operating. "Clearly it is a strong positive for the company, the ability to reduce liabilities and the interest burden," Fitch Ratings managing director Mark Oline said. "At this point the interest of the bondholders and equity holders are pretty much aligned. Both want Ford to survive the current environment."

DATED: 07.04.09

FEED: AW

Nissan and JLR secure European funding

The European Investment Bank (EIB) has approved funding for Nissan and Jaguar Land Rover in the UK.
A £340 million package has been approved by the EIB for Jaguar and Land Rover and Nissan’s UK and Spanish operations have been given a £370m package.
Both manufacturers will invest the money in research and technology of fuel efficient models.
A spokesman from Unite the union said: "We wish it could have come sooner but we have it now so we're very pleased.
"This is certainly not a handout. This is a loan which will be repaid to the Government as soon as we are in a position to do so."
The EIB loans have to be guaranteed by the Government before any money is paid to the manufacturers.
The Federation of Small Businesses welcomed the EIB's support, but said the loans had to be implemented as soon as possible by the government to ensure businesses involved in the supply chain could benefit from it.

DATED: 07.04.09

FEED: AM

Saab dealers have been dealt another blow as the brand’s contract hire business has been closed.
Masterlease, which runs Saab Contract Hire, has also stopped underwriting any fleet contracts for Saab vehicles.
There are currently no alternatives, but Saab said it is talking to “various funding partners about contract hire, both private label and general”.
It added that GM UK stands behind any warranties on Saab products.
One long-standing Saab dealer said there was “nowhere to go at the moment”.
While contract hire was popular, it was difficult to gauge the impact of its withdrawal as Saab had received a lot of bad press which was generally affecting sales, he said.
Another dealer who said contract hire accounted for around 30% of business last year, was switching as many customers as possible to PCP.
He did not expect a replacement partner for Saab contract hire to be found in “the near future”.

DATED: 07.04.09

FEED: AM

As one of the phenomenons of the crisis impacting our industry and that of the wider economic meltdown, the decision to cancel next year’s British International Motor Show was one of the least surpising or significant.
To have persisted with an event designed to showcase the achievements of the UK motor industry would have appeared a ghastly fraud with carmakers – like so many modern day emperors – counting while their Rome burned around them.
With so many problems besetting our industry the Society of Motor Manufacturers and Traders is to be commended for taking the decision to cancel.
It claims, after all, the industry is in “a state of emergency”. GM’s protracted crisis only exacerbates the situation.
A look at the areas of potential impact provide considerable food for thought: scrappage, of course, will lead the expectations of many.
Most industry watchers say we will hear in the Budget whether the UK is to have a scrappage scheme.
Other areas of concern include changes to VED refunds which could cost the industry £70-80 million a year, the proposed 2010/2011 introduction of a first year rate of tax on new cars, increases to DVLA first registration fees, fuel prices and taxation, benefit-in-kind on dealer demonstrators and rate relief on empty buildings.
The issues at hand are enough to cause sleepless nights at the best of times – in the middle of a crisis, the Budget will be critical to the survival of the sector as we know it.

DATED: 07.04.09

FEED: AM

Labels: Delayed Drafts

GMAC UK is including free involuntary unemployment cover on all its new and used car finance packages, covering repayments of up to £1,000 per month.
Dennis Foley, managing director, sales and marketing, GMAC UK, said: “Our aim is to give consumers confidence that now is a great time to visit a Vauxhall, Saab or Chevrolet retailer and purchase a new or used car.”
Free involuntary unemployment cover is available on all GMAC finance contracts taken out from April 3 until June 30 this year and provides customers with 24 months of free cover in the event of unexpected involuntary unemployment, covering repayments of up to £1,000 per month, for a maximum of 12 consecutive payments.

DATED: 07.04.09

FEED: AM

The European Investment Bank is expected to approve significant funding for two car makers in Britain, Jaguar Land Rover and Nissan, later.

Jaguar Land Rover has applied for around £270m to invest in research and technologies to develop more environmentally friendly cars.

Nissan and its sister plant in Spain are seeking around £360m to produce more fuel efficient, cleaner engines.

The moves come as the car industry has been hit globally by a slump in sales.

When it is distributed, this funding is set to be the first money provided to any car maker in the UK since the financial crisis began.

Under EIB rules, any loan requires that car makers must invest in new technology to lower emissions during vehicle production and driving.

The EIB loans are expected to require some form of guarantee from the UK government, before any money is paid.

The board of the EIB - the lending arm of the European Union - is debating the topic at a meeting in Luxembourg.

Slowing industry

Figures released on Monday illustrated the gloomy state of the sector.

UK car sales dropped 30.5% in March, compared with the same month a year earlier, according to the Society of Motor Manufacturers and Traders (SMMT).

The industry argues that help is needed immediately for car makers to ensure they can survive the recession.

Business Secretary Lord Mandelson has set aside £2.3bn in support for the car industry, mostly in the form of loan guarantees as well as direct aid to car makers.

DATED: 07.04.09

FEED: BBC

Jaguar Land Rover will get approval for a loan of £270m (300m euros) from the European Investment Bank on Tuesday 7 April, the BBC understands. 

According to government sources, the firm has met the loan criteria. 

A loan of £364m (400m euros) will also be split between Nissan's plants in Sunderland and Spain, bringing the UK total to £455m (500m euros). 

Jaguar Land Rover said it could be a number of weeks before any cash was handed over. 

Sources at the company were more cautious, stressing that whilst they were confident the money will be approved, they did not want to assume it would. 

Greener technology 

If the EIB loan is approved by its board when it meets in Luxemburg, it would then need some form of government guarantee before any monies were disbursed. 

They add the deal is likely to be approved by the board of the EIB when it meets in Luxembourg next week. 

Business Secretary Lord Mandelson has set aside £2.3bn (2.5bn euros) in support for the car industry which is mostly made up of loan guarantees as well as direct aid to car makers. 

The criteria for any EIB loan require car makers to invest in new greener technology to lower emissions during vehicle production and driving. 

The car industry has been particularly hit by the recession with UK sales down 22% and car production plummeting 59% on the same time last year. 

Jaguar Land Rover cut 450 staff in January 2009 and are seeking further 300 salaried redundancies from its 14,500-strong UK workforce. Some 50,000 British jobs are dependent on the firm. 

Staff are essentially working a four-day week following an agreement with trade unions. Hourly-paid employees are working a 35-hour week and a pay freeze has been agreed on the guarantee of no compulsory job cuts for two years. 

Based in Gaydon, Warwickshire, it employs about 15,000 people in Castle Bromwich, Coventry and Solihull in the West Midlands and Halewood, Merseyside. 

Some 12 million people are employed in the European car industry, including 800,000 workers in the UK. 

A Swedish court on Monday granted General Motors' loss-making unit Saab an extension of the period it is protected from creditors, giving the carmaker further time to restructure. 
The court, in Vanersborg, approved the extension after hearing that no creditors had entered reservations against Saab's proposed reorganization plan, which envisages asking creditors to write off 75 percent of its non-prioritized debts.  "The court has decided that the reconstruction can continue until May 20 at the latest, if no other decision is taken before then," the court said.