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Lord Mandelson has announced a £2.3bn loans package to support the UK car industry.
In the House of Lords today the business secretary said £1.3bn of loans from the European Investment Bank - a publicly owned bank whose owners are the member states of the EU - would be made available to UK car manufacturers and major suppliers. A further £1bn of loans will be made available for investment in green vehicles.
The trade and investment minister Mervyn Davies has also been asked to draw up plans to make it easier for car companies' financing arms to get funding.
Mandelson refused to call the package a bail-out, saying instead it was to enable hte industry to move towards a green future. He is meeting with representatives of the car industry tomorrow to discuss the plans and the future.
SMMT chief executive Paul Everitt said: "This is an important announcement that recognises the strategic contribution of the motor industry and follows action in other EU member states, the US and Japan.
"The UK motor industry is productive and globally competitive with a long-term future at the heart of the low-carbon agenda. We look forward to discussing the substance of the announcement at our meeting with Lord Mandelson tomorrow."
Stephen Sklaroff, the director general of the Finance and Leasing Association added: "We are encouraged that in his statement Lord Mandelson acknowledged the importance of motor finance in helping to kick-start the economy. We look forward to early discussions with Mervyn Davies on how best to support all types of lenders to free up credit for new and used cars."
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