London: Jaguar Land Rover has borrowed five billion yuan (£560 million) from five Chinese banks as it seeks to ease the financial strains prompted by the coronavirus pandemic.
The UK’s largest carmaker has borrowed the money under a three-year revolving credit facility from lenders including Bank of China, ICBC, China Construction Bank, Bank of Communications and Shanghai Pudong Development Bank.
The loan will be used to secure its short-term cash needs as it tries to weather the crisis.
UK car industry’s 2,000 job cuts underline gloomy prospects
JLR, which is owned by India’s Tata Motors, was not eligible for support under the UK’s joint Treasury and Bank of England Covid corporate finance facility because its debt was not rated as investment-grade before the crisis began, meaning it was seen as too risky.
Carmakers have been hit hard, with disruptions to their supply chains followed by the closure of factories and an almost complete freeze on sales in key markets. The expectation of years of significantly lower sales has prompted well over 4,000 job losses in the UK car industry in recent days from the manufacturers Aston Martin, Bentley and McLaren and the car dealership Lookers. European carmakers have also announced tens of thousands of job losses as they try to cut costs.
JLR had furloughed about half of its 40,000 workers worldwide as the UK lockdown was imposed, including at factories in Castle Bromwich, Halewood, Solihull and Wolverhampton. It had already been forced to cut production at Halewood because of weak sales, even before the crisis hit the UK properly.
JLR is a partner in a large joint venture in China with the state-owned carmaker Chery. The joint venture’s factory in Changshu, near Shanghai, restarted production of six Land Rover and Jaguar models on 24 February after the pandemic led to it being closed temporarily.