The UK cannot afford to treat Jaguar Land Rover as “another Woolworths”, Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, has warned.
The critical difference, he said, between the two was the massive amount of research and development, involving 4,000 workers at Gaydon, which JLR undertook.
That accounts to £400million a year, around half of all the R&D spend in the UK auto industry.
His comments came as negotiations between the government and JLR continued.
JLR has been asking for loan guarantees on commercial terms in order to help it secure its financial future.
It employs some 15,000 workers directly with up to another 60,000 dependent on the car company.
The collapse of Woolworths is putting nearly 30,000 workers out of a job.
Lord Bhattacharyya said he had every sympathy with the plight of the Woolworths workers but he rejected the claims of critics that there was no difference between the two and JLR should be allowed to fail too.
He insisted: “Jaguar matters because it is the future of this country.
“It is the one flagship British car company which does British R&D. The others basically just make cars here which are designed in Japan or Germany.
“We have to have sustainability in R&D in this country. We cannot live on fresh air.”
Lord Bhattacharyya said the government was talking a good game on R&D, but cautioned: “If it does not turn that into action then people will say that is all it is – talk.”
JLR was making the environmental commitment now through low carbon, light weight cars, new materials and hybrid technology.
The company had a £7billion a year turnover, roughly as large as Marks & Spencer.
And he praised Indian group Tata for buying the business from ailing US giant Ford. In addition to the $2.3billion purchase price, it has committed $1billion to keep JLR going.
“If Tata had not taken over JLR would have been sunk by now,” said Lord Bhattacharyya.
He says government loan guarantees are needed to help pull the company through the recession fit and able to take advantage of the eventual upturn.
JLR is planning up to eight new models over the next two to three years.