Lord Mandelson is the man charged with finding ways to fund UK Car purchases (yes, he of the dodgy mortgage debacle – at least he should know a few tricks!) as the credit crunch has dried up funding, leading to an unprecedented drop in new car sales in the UK.
Mandelson is due to make a statement in the Lords just after 3pm today, outlining the help the government is going to offer to ailing car makers. Central to this package is expected to be a funding channel directly from the Bank of England to inject liquidity in to the car financing sector.
Arguably, this will benefit overseas car makers more than UK car makers, but it is all about getting the industry on the move again. And there is every possibility that other governments around the world will offer a similar system (it’s already on the cards in the US), so UK Car makers will benefit from this.
Also muted, although unlikely to happen, is a ‘Scrappage’ scheme, similar to those introduced in Germany and France, which would pay owners of older cars to take them off the road and invest in a new ‘Clean’ car. But that is thought to be unlikely at the present time.
Also expected is a line of credit for car makers in trouble. In the same way that Ford in the US has declined a State bail-out, instead asking for government-backed funding, UK car makers like Jaguar and Aston Martin are thought to favour this route. And if the companies are basically in good shape, which Jaguar/Land Rover and Aston Martin are, then it is actually a money maker for the tax payer, not a cost.
This sensible range of stimuli should be enough to at least fan the flame of car sales, and at no long-term cost to the taxpayer. Let’s hope Mandelson is sensible enough to confirm the help this afternoon.
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