TALKS between Jaguar Land Rover and the government on a financial-aid package for the carmaker have reached an impasse over the degree of oversight and management control being demanded by Whitehall.

Senior industry sources say officials have set out a tough set of conditions for JLR management before they agree to guarantee several hundred millions of pounds of loans for the car company.

JLR, owned by India’s Tata, is resisting the demands, the sources said, with some company executives suspecting they are being used as an excuse by the government not to commit to the loan deal.

Government sources said last night they were seeking only conventional safeguards, and rejected suggestions the talks were about to end.

The carmaker, which employs 15,000 people, is awaiting government approval for a £340m loan from the European Investment Bank. The EIB gave the green light several weeks ago, but cannot dispense the cash until Britain agrees to repay it if JLR goes under.

The Sunday Times revealed last month the EIB advance was being considered as part of a larger £800m package, a portion of which the government would guarantee. The talks then revolved round how JLR could provide sufficient security – through its factories, plant and stock of cars – to allow the government and a group of banks to take part.

JLR needs the money because of a big drop in car sales triggered by the credit crunch and recession. In March, Jaguar sales were down 30% compared with the same month last year, while Land Rover sales fell 37%.

Tata, which bought JLR last year for £1.3 billion from Ford, has asked the government to step in and underwrite loans, saying normal commercial lending was not available.

Meanwhile, Fiat boss Sergio Marchionne is expected to meet senior German government representatives this week to discuss his company’s possible purchase of a stake in General Motors Europe, parent company of Vauxhall and Opel.

Marchionne completed a deal with the American government last week to take a 20% stake in Chrysler, the stricken American carmaker, when it emerges from Chapter 11 bankruptcy protection.

GM may enter Chapter 11 if its lenders do not write off most of its debts. The deadline for the vote is May 26. GM is seeking a buyer for GM Europe, with Fiat regarded as a likely buyer.

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