The UK government is working to make sure the vast majority of auto companies and their suppliers have a future, business secretary Peter Mandelson said on Friday as he visited a car factory.

During a visit to Nissan’s Sunderland plant, in north east England, which recently shed 1,200 jobs, Mandelson told Dow Jones:  “We’re going to make sure that where these companies are viable going concerns – and that is the overwhelming majority of them – they do have a future.”

The government has announced a loan guarantee scheme for automakers and is looking at further measures to help them, their suppliers and finance arms.

Mandelson said while carmakers have to reduce supply to react to the decline in demand due to the recession, it was “vital companies do not cut back and harm their capacity” to react when the economy picks up.

The SMMT trade group has called on the UK government to introduce a GBP2,500 ‘scrappage’ scheme to encourage buyers to trade in older, higher-polluting cars for new models but opponents argue that would largely benefit foreign automakers as most vehicles sold here are imported (most UK-produced models are exported).