Car loans

The European Investment Bank (EIB) has approved €866m (£779m) of loans for European-based car manufacturers to aid in the design and build of cars that emit fewer CO₂ emissions.

The package includes £370m to Nissan and £340m to Jaguar Land Rover (JLR), who collectively employ 20,000 people in the UK. Volkswagen will also receive a loan for its plant in India to develop greener cars ahead of introducing them to the Indian market next year.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: ‘Confirmation of EIB support for vital investments in cleaner technology is extremely good news for the UK motor industry. It will provide welcome reassurance to the companies concerned and signals their determination to be prepared for the low-carbon future.’

Over half of the loans approved will be provided under the EIB’s European Clean Transport Facility (ECTF) and comes as part of a larger package to support the industry, with the EIB planning to raise its total lending by €15bn per year for 2009 and 2010.

In response to the announcement, the Confederation of British Industry’s (CBI) deputy director-general, John Cridland, said: ‘These loans are great news for the UK car industry, which is currently suffering a sharp and ongoing slump in demand. Car firms in the UK are among the most efficient in the world and have the capacity to be significant makers of more fuel-efficient cars.

‘We hope the UK government will also help by introducing a short-term scrappage scheme that rewards consumers who replace their older, less efficient cars with newer, more efficient models.’

The UK’s largest trade union, Unite, has also welcomed the news but warned that government support is needed urgently.

Tony Woodley, joint general secretary of Unite, said: ‘At a time when there is only dismal news for this vital industry, this European money will help Jaguar and Nissan plan for the future. In underwriting the loans, the government has demonstrated it recognises the strategic importance of this industry to our country.

‘But with this money earmarked for longer-term environmental projects, we need urgent action to help all UK-based car manufacturers in the here and now.

‘A cash-flow crisis and the collapse in demand are hammering our companies and putting thousands of jobs at serious risk. We need government measures to address these concerns, to protect jobs and stimulate demand. That means a subsidy programme to keep people at work and off unemployment benefits, fixing the broken finance system so that it is easier to buy a car and putting in place a scrappage scheme to encourage people to purchase a car at a time when confidence is at an all-time low.’

The announcement follows loans approved by the EIB for BMW, Renault and Volvo Trucks last month. Since December, a total of €3.6bn in loans has been approved and plans for further loans will be presented to the EIB in May and June.