The financial troubles of Jaguar Land Rover have sent a shiver through the used car industry as they will be seen as symptomatic of the way the global credit crunch is affecting car businesses worldwide.
The prestigious company was purchased by India’s Tata in June for £1.7 billion but output has since been cut at its three main UK manufacturing sites, meaning that fewer used Jaguars will be appearing on used car forecourts a few years down the line.
State aid for the carmaker is being considered by the government with recently-returned minister Peter Mandelson, the business secretary, warning that there is no "open chequebook".
Mr Mandelson will no doubt query why Tata has recently announced a sponsorship deal with Formula One team Ferrari before agreeing to a cash injection from the taxpayer.
The Society of Motor Manufacturers and Traders (SMMT) think that Gordon Brown’s administration should take the chance to look at the whole industry when considering the Jaguar issue.
SMMT has said that "the situation in the UK is a national emergency requiring urgent action".
The government will need to consider whether Jaguar has a viable long-term business plan before offering short-term help. It has indicated that no action will be taken until the New Year.
Some analysts believe that Jaguar needs a serious revamp. Used car dealers have sometimes found to their cost that consumers’ appetite for luxurious, gas-guzzling cars is diminishing.
Ironically it is factors such as the government’s Vehicle Excise Duty tax which is reducing the demand for environmentally-unfriendly cars and spelling trouble for the likes of Jaguar Land Rover.
Written by James Christie