Jaguar Land Rover is the latest automaker to look for additional credit to help it get through this sales downturn created by the COVID-19 pandemic; however, instead of using what many consider “conventional” banking partners, JLR secured a $705 million line of credit from a group of Chinese banks.
Governments around the world have been offering to assist automakers reeling from the pandemic because they are major sources of jobs across the industrialized world. However, even though JLR, which is owned by India’s Tata Motors, is the largest automotive employer in Great Britain, it was not eligible for pandemic-related support from the British government.
Under the rules for the United Kingdom’s corporate finance facility put in place to help businesses, which is administered by the UK Treasury and the Bank of England, JLR did not qualify because the company’s debt was not rated investment grade before the pandemic overwhelmed Britain’s economy.
Britain has suffered more deaths than any other country in Europe, according to statistics compiled by Johns Hopkins University. As it stands, carmakers in the United Kingdom have eliminated as many as 4,000 jobs as companies such as Aston Martin, Bentley and McLaren braced for months of slower sales.
Overall, automakers across the world have been successful in lining up additional credit from a range of sources even though pandemic has created major stress in key markets, in Europe, North America and China.
However, British automakers haven’t fared well with their own government. JLR isn’t the only British nameplate that’s gotten a “No” vote on pandemic funding. The aforementioned McLaren asked for a $180 million loan but was refused.
Many automakers have drawn down on existing credit lines and sought out additional funding to get through the downturn, but until now, Chinese banks haven’t been the lead lenders for these credit lines. For JLR, using Chinese banks makes sense as China is one of the principal markets targeted for expansion by JLR.
“In China, we are beginning to see recovery in vehicle sales and customers are returning to our showrooms. Our joint venture plant in Changshu has been in operation since the middle of February,” the company said in a statement.
Meanwhile, the first Range Rover made under new social distancing measures drove off the production line at Jaguar Land Rover’s manufacturing plant in Solihull, England, following the recent temporary pause in production due to the coronavirus pandemic. The shutdown began in March as the lockdown began in Great Britain.
Jaguar Land Rover resumed production from May 18, starting with manufacturing plants in Solihull in the UK as well as in Slovakia and Austria.