Jaguar Land Rover's Chief Executive Officer, David Smith, has urged immediate action by the Government to deliver the aid package promised to the UK's automotive industry if serious industrial consequences are to be averted.

Addressing an audience that included the Business Secretary, Lord Mandelson, at the CBI's Manufacturing Dinner in Birmingham, Mr Smith welcomed the Government's reaction to calls from the automotive sector for support while stressing the need to stimulate the market and the urgency of the situation facing manufacturers, suppliers and dealers.

'It would now be a tragedy were the aid package not to be delivered in time to avert the industrial consequences of another quarter like this one,' Mr Smith told the audience.

Mr Smith said tens of billions of support had been provided by the Germans, the French, the Swedes and the Americans for their automotive industries. He said action was needed right now in the UK, not just for the short-term task of protecting jobs and skills, but also to ensure the country had the right foundations for economic success in the future.

Mr Smith repeated this was not a bail out, pointing out in the eighteen months preceding the credit crunch Jaguar Land Rover had made over ￡600m in profit.

The economic crisis, he said, had been brought about by a 'massive collective failure of leadership of those who run our financial systems' and it was essential to ensure this did not happen again without falling into the trap of over-regulation which would stifle any recovery.

He emphasised the importance of manufacturing to the UK's economy which had been overshadowed by the financial and service sectors. In the case of Jaguar Land Rover, it supported 75,000 jobs; spent ￡2.5 billion with suppliers; and its exports earned over ￡4 billion a year for UK plc.

'Manufacturing matters. It has been the bedrock of Britain’s economy. It has been our ability to make, allied with our ability to sell, on which the wealth of this country rests. Over the last quarter of a century, this reliance on manufacturing and trade has been overshadowed. Too much of our economy has been dominated by the service and financial sectors. In the last few months, we've seen the folly of the over-emphasis on finance.'

He added, 'The reckless indifference of past industrial policy has left a technology and skills gap that we need to continue closing quickly.'

Mr Smith said the UK motor industry is investing in new technologies such as electric hybrids and lightweight materials and he said Britain had the opportunity to lead the green, low carbon industrial revolution just as it had led the steam powered high carbon industrial revolution of the late C18th.

Jaguar Land Rover is investing ￡800m to develop sustainable technologies and will reduce vehicle CO2 emissions by 25% over the next few years, well ahead of the industry mandated average. The company spends ￡400m a year on research and development, accounting for around a third of the UK's total annual investment in automotive R&D. Thanks to the use of clean, modern, efficient diesel engines coupled with intelligent management systems, Jaguar and Land Rover are capable of producing premium vehicles capable of over 40 mpg. Jaguar has pioneered the use of aluminium with the result the XJ and XK are the lightest in their class, with the XJ being voted the greenest luxury vehicle for two years running.

Mr Smith said Jaguar Land Rover was working with universities, the Technology Strategy Board and Advantage West Midlands to develop these new technologies.

Examples of new high-tech low-carbon thinking include the intelligent stop-start system fitted to this year's diesel Freelander model that eliminates tailpipe pollution when the vehicle stops, such as in traffic or while waiting at the lights.

Other innovations, showcased by the LRX concept car, include a pioneering diesel-electric hybrid engine that not only gives pollution free low-speed city driving but also improves off-road performance by supplementing the normal diesel power with electric power.

These projects, and others, are partly funded by the government through its Low Carbon Vehicles Innovation Platform, which Mr Smith described as a great example of intelligent government support for the industry.

'But we don't just need partnerships between public and private sectors, academia, trade unions and local Government. We need more co-operation and joined-up thinking between our different industries. Under the umbrella of a new low-carbon industrial policy, British industries – automotive, aerospace, digital manufacturing, electronics, pharmaceutical, defence, chemical, the oil industry, and more – could and should work together more effectively. Our automotive industry, for example, can provide huge long-term improvements and so can the aerospace business with carbon reductions of up to 20 percent within five years. By working better together we can all help UK plc become a low-carbon leader not a follower.'