Car makers are looking for “bold and concerted action” from central banks in the US and Europe to prevent the financial crisis wrecking the “real economy”, Jaguar Land Rover chief executive, David Smith has said.
Speaking at the Paris International Motor Show, Mr Smith said he wants to see a cut in UK interest rates as early as next week.
“The Bank of England must take action,” he said. “I will be very disappointed if they don’t – this is a very dangerous time for the world economy.”
JLR has been among a number of major carmakers which have cut production levels in recent weeks as the credit squeeze has sent sales in major markets such as Europe and the US plummeting.
Nightshift working has been stopped at the company’s plants at Castle Bromwich and Lode Lane in Birmingham and both plants have been put on a four-day production cycle. The traditional October shutdown has also been extended from one week to two as the company seeks to avoid stocks of unsold cars building up.
Also, 500 contract workers brought in to help meet initial demand for the new Jaguar XS at Castle Bromwich and the new Freelander at its Halewood plant on Merseyside have had their contracts terminated.
But Mr Smith was upbeat about JLR’s prospects – although he stressed he could not rule out further production cuts or even layoffs among full time workers if the financial situation deteriorates further.
The last time Mr Smith talked to The Birmingham Post, in July, the company was on a high. It had just been bought out from Ford by Tata Motors of India in a £1 billion-plus deal and sales of both brands were running at healthy levels.
“But over the summer we have seen what was essentially a financial issue turn into a real economy issue,” Mr Smith said. “I am quite concerned because we are seeing a complete breakdown in confidence between banks which means that our customers are finding it difficult to find credit with which to buy our cars.
“We have taken action to reduce production to avoid getting into a build up of inventory and this means that we are buying fewer components and services.
“Action like this has quite a severe effect throughout the economy and we will need to see some bold and concerted action in both America and Europe to prevent the situation from getting even worse.”
Mr Smith said Tata was keen to keep JLR’s production development programme – a new version of Jaguar’s flagship XJ saloon is due next year – on track and even speed up where possible.
JLR is currently basing its production schedules on a 90 day review of sales throughout the world and will be examining the September figures closely before deciding whether or not to make further cuts.
“We cannot give any guarantee on jobs, but we are committed to do the best we can to maintain employment,” Mr Smith said.
“The business is fundamentally stronger than it has been in the past and by taking the action we are taking we will come out of the present situation in even better shape.”