Ministers have been in talks with Jaguar Land Rover regarding the possibility of state help for the manufacturer, Business Secretary Lord Mandelson has said.
But he warned that the Government did not have "an open cheque-book" to bail out struggling private companies and stressed that the emphasis was still on Tata, Jaguar land Rover's Indian owners, to ensure the firm's survival.
Lord Mandelson claimed it was too early to judge whether there would be state intervention at Jaguar Land Rover, which employs around 15,000 in the UK, or other parts of the British car industry.
The company announced last month plans to make around 850 IT and engineering staff redundant in the West Midlands by the end of the year in response to "severe" global car market conditions.
Lord Mandelson told Sky News: "I'm talking to the car manufacturers. We are analysing very carefully what is going on in the sector and we will make good judgements in good time if it is appropriate for the Government to take any action or if it is possible for us to do so."
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