Toyota: Tariff and barrier free access “vital for future success”
Toyota’s announcement of £240m investment in its Burnaston plant comes with a warning. Tariff-and-barrier free market access to the EU is “vital for future success”.
Toyota has announced a £240m investment in the UK to upgrade its plant in Burnaston, Derbyshire. The money, along with £21.3m from the government, will be used to modernise the plant. In a statement about the news, the Japanese carmaker said “the investment will improve plant competitiveness and additionally it will promote UK supply chain efficiencies”.
The investment will be hailed as good news for the country’s post-Brexit future. It is good news. But it comes with an added warning to the government as it prepares to begin Brexit negotiations.
Continued tariff-and-barrier free market access between the UK and Europe that is predictable and uncomplicated will be vital for future success.
Johan Van Zyl, president and chief executive of Toyota Motor Europe
Toyota Motor Europe president and CEO Johan Van Zyl said the company was doing all it can to “raise the competitiveness of our Burnaston plant”. However, he added that “continued tariff-and-barrier free market access” will be “vital for future success”.
And speaking to Autocar, a Toyota spokesperson said that whilst the plans secured the production of models the Burnaston plant already make, it did not mean that other models would also be built there.
Single market still a big priority for automotive industry
Other carmakers in the UK including Nissan, Vauxhall and BMW have also warned of the danger losing single market access and the introduction of tariffs to them. And the Society of Motor Manufacturers and Traders (SMMT), a trade body for UK the automotive industry, called on the government to prioritise single market membership in Brexit negotiations. It was included in a list of priorities for the car industry outlined in written evidence to the House of Commons committee for Exiting the EU.
Other priorities listed include “continued membership of the customs union” and “guaranteeing unrestricted access to talent across Europe”.
You can see the full submission from the SMMT at data.parliament.uk.
In their evidence, the SMMT said that these are “all critical to the competitiveness of the UK automotive sector and it is vital that these priorities are recognised in government’s negotiations to secure continued growth in the industry”.
Huge costs of “no deal” and falling back on WTO rules to the car industry
The SMMT’s paper also laid out the costs of the UK leaving the EU with “no deal” and having to fallback on WTO rules. It said that this would see a “10% tariff on vehicles and an average 4.5% tariff on components which will increase the cost of production, undermine competitiveness and potentially increase the cost of cars for consumers”.
In the government’s Brexit white paper, it ruled out retaining single market membership so that it could control immigration from the EU. This is despite the importance of continued immigration to the automotive and other sectors. And whilst the prime minister maintains that she hopes to agree a new deal that would allow the “most frictionless trade possible”, many experts believe that it is an unlikely outcome given the timeframe for negotiations. The government’s pursuit of immigration control as well as its desire to not be under the jurisdiction of the European Court of Justice (ECJ) also make such a trade deal more tricky.
In her Lancaster House speech, Theresa May said that she would be prepared to walk away from negotiations with “no deal” rather than a “bad deal”. This is despite Brexit secretary David Davis’ revelation to MPs yesterday that the government had not done an economic impact assessment of the UK leaving with “no deal” since the referendum.
Toyota’s investment announcement as well as that by Nissan last October show both carmakers are keen to maintain their presence in the UK. However, if Brexit turns out to mean huge costs and a danger to its competitiveness, that could change.