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Toyota could shift some UK production over Brexit uncertainty

Toyota warns the longer it takes to get clarity on Brexit, the more likely it will move UK production elsewhere.


Toyota has warned ongoing Brexit uncertainty could lead the carmaker to shift some UK production elsewhere. Speaking to Reuters, Toyota executive vice president Didier Leroy said the government had given early assurances that a free trade deal with the EU could be negotiated by the time the UK leaves the bloc. However, he noted this seems to have changed with government now talking of a transition period with a new trade deal not being agreed for another two to three years.

A few months ago, the UK government was saying, ‘We’re sure we’ll be able to negotiate without any trade tax’.

They are not saying that any more.

Didier Leroy, executive vice president of Toyota

Leroy added: “It’s clear that if we have to wait two to three more years to have clarity on this topic, we will have a big question-mark about our future investment in the country.”

Despite plans to upgrade the Japanese carmaker’s plant in Burnaston, Leroy said Toyota could not make a decision about whether to build a new model there until “we have clarity on the future trade relationship”. He urged for clarity “as quickly as possible” adding “the longer we have to wait, the more potential there is to move to another factory.”

We will not postpone a new product for three more years just because the negotiation is going to take three more years. So really there’s a strong need for us to have clarity as quickly as possible.

These are sentiments that are likely to be held by other car manufacturers in the UK who have consistently called on the government to keep the UK in the single market and customs union. Nissan chief executive Charles Ghosn said it would “re-evaluate the situation” when the Brexit terms are known and will make a decision based on whether the plant would continue to be competitive. Colin Lawther, another Nissan executive also warned that a return to WTO rules for trade with the EU would be “disastrous” for carmakers in the UK.

Nissan: WTO rules would be “disastrous”

Government ministers have only recently come to accept that a new trade deal could not be agreed within the limited timeframe for Article 50 negotiations and a transition period was needed to avoid a “cliff edge”. However, there still seems to be some confusion over what the UK’s position is on a transition period. The Guardian reports the chancellor PhilIp Hammond as telling a House of Lords committee yesterday: “There is general agreement that it would not make sense to ask business to face two sets of changes and that implies a transition or interim period would need to look a lot like the status quo”. However, he reiterated the government’s position that the UK will leave both the single market and customs union when it leaves the bloc in March 2019.

The problem with this position is that the clock is ticking and many believe there is not enough time to negotiate a bespoke transition period. After the last round of Brexit talks, the EU’s chief Brexit negotiator, Michel Barnier, said the UK’s demands over the single market are “simply impossible” because the government wanted to walk away from the institutions that protect it.

UK still asking for the impossible on single market

And if what the government is seeking is the status quo, it seems pointless to try and recreate it.

Following the UK’s request for more time to prepare, the next round of Brexit negotiations has been moved back a week. It will come before the Tory party conference in which the prime minister is expected to clarify her Brexit strategy.


Image: © JuliusKielaitis / Shutterstock.com
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