The goevrnment has held talks with Jaguar, Land Rover over the possibility of state aid for the car maker, Business Secretary Lord Mandelson has confirmed.

No decision has been taken yet and there was not “an open chequebook” he said.

Production at Jaguar and Land Rover 3 sites in UK has been trimmed ever since the marquees were bought over by Tata Motors. The companys employs a total of 15,000 people in UK said that it faces “unprecedented trading conditions ” as global sales for cars has fallen sharply  since the summer. The company has also announced last month that it was cutting 850 agency jobs.

The news of talks came after Tata said they want to sponser Ferrari’s F1 team for the season 2009. Tata Motors officials denied to comment on the talks with the Government.

Jaguar Land Rover chief executive David Smith said he agreed with the opinion of trade body Society of Motor Manufacturers and Traders that the industry’s “situation in the UK is a national emergency requiring urgent action”.

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Source: bbcnews

“We are analysing very carefully what is going on in the [car] sector, and we will make good judgments in good time if it is appropriate for the government to take any action or if it is possible for us to do so,” said Lord Mandelson.

“I have had discussions with the owners and management of Jaguar Land Rover in particular, because they argue that they are under particular strain.”

Yet Mr Mandelson added that “people should not assume that we are as a government in the business of bailing out any company that has a problem during this coming very tough period”.

He said he would not be “bounced” into any decision, and that the owner of Jaguar Land Rover - Tata - had first and primary responsibility for the carmaker’s financial requirements.

Shadow Business Secretary Alan Duncan said the government needs to be ready to step in and help sectors survive the slump.

“What companies such as Jaguar Land Rover and Nissan need is credit help, not unconditional bailouts, to prevent those companies which are viable in the long-term going to the wall in the short-term,” he said.

“This means government guarantees to underwrite loans made by banks on commercial terms to businesses.”