Jaguar Land Rover – Clever Finance Deal

JLR releases £170 million by financing cars in transit

Car makers have been begging lines of credit from wherever they can in the last year as the recession has bitten hard in to their finances. Jaguar Land Rover started off down the Government Loan route, but it soon became clear that the strings attached to any Government sourced finance where unacceptable. But in a sign that the future of JLR looks pretty rosy JLR managed to secure £175 million in private financing back in August as part of a bid to raise £500 million, and Tata have refinanced the loans used to acquire JLR.

But the deal they’ve just put together with GE Capital is a cute – and innovative – way to release some funding back in to the business. GE Capital are to finance all Jaguar Land Rover production from the time it leaves the factory gate for 90 days whilst the cars are in transit to dealers and sitting around in showrooms. That releases a not insignificant £170 million, which will be a very useful chunk of working capital.

Working capital funding has been in short supply to car makers from traditional bank financing, and this appears to be the first time – certainly in Europe – that this part of the distribution cycle has been used to leverage funding. But it makes sense to GE Capital and they’re hoping to find more car makers looking for similar financing.

By Cars UK