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Will the car makers get what they want?

  • Should the car industry get aid?
  • Is it enough to help car makers survive?
  • Tell us what you think of the aid package
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Will the car makers get what they want?
The answer to this remains unclear.

Mandelson has justified the failure to provide access to the special liquidity arrangements available to banks as being the fault of Bank of England regulations.

He has indicated that he is prepared to find ways around this, and has asked Trade & Investment minister Mervyn Davies to see if this is possible.

However, the Bank of England regulations have been in place for years, and many question why no progress on these issues has been made to date - particularly as the SMMT asked for the help at its first meeting with Mandelson in November.

Since that time, figures accessed by The Times newspaper suggest that 300,000 applications for car credit have been refused that represents around 12% of all car sales last year, and is the amount by which car sales fell during 2008.

The trouble stems from the banks' unwillingness to loan money at competitive rates through fears of losing cash.

Bank of England guarantees, such as those given to the banks themselves, would lift these concerns, allowing car manufacturers' finance arms to offer deals to car buyers, thereby stimulating the market.

Likewise, business and fleet rate amendments, and the postponing of VED rate changes, are being asked for as a method of stimulating sales.

There is no evidence of any support for these proposals from Mandelson, who is said to want to ensure that any financial support is only used to boost sales of cars built in Britain.