Brexit: Japanese car makers threaten to leave UK
Japanese car makers Toyota, Nissan and Honda are threatening to leave the United Kingdom if they don’t have the same facilities to export to Europe after the Brexit.
“If we don’t have that guarantee, no private company will be able to continue”, the Japanese ambassador said in the margin of Japanese car makers meeting with Prime Minister Theresa May in Downing Street last week.
142.000 people employed
Stakes are high as Nissan, Toyota and Honda alone account for 40% of cars produced in the UK and employing 142.000 people in the country.
Nissan, being assured by Theresa May that it would have an uninterrupted access to the EU market if it was to further invest in its UK factory, is doubting seriously now May can stick with her word on this.
Whole sector in doubt
But the whole sector is in doubt. The Range Rover factory in Halewood by Liverpool is going to cut production this year because of “continuous uncertainty about the Brexit”.
Jaguar Land Rover, British major car manufacturer owned by Indian Tata, has seen sales stall last year, what already is better than overall car sales in the UK, that dropped by 6%. Production countrywide has decreased with 3%.
54% imported from EU
Eight out of ten vehicles produced in the UK are exported. 54% to the EU itself and 10% to countries having free trading agreements with the EU like Japan, South Korea and Mexico.
“The sector doesn’t want to put at risk two-thirds of its sales to be sacrificed for the ambition of new treaties with third countries that cannot be made in short time”, says Mike Hawes, director of the Society of Motor Manufacturers and Traders (SMTT).
Two years transition period
He thinks a transition period of at least two years after the UK leaving the EU on 30th of March 2019 is necessary in which the same rules apply as today for trading with Europe. “Something that is far from acquired today due to lots of disagreements”, Europe’s main negotiator Michel Barnier warns.
Mike Hawes insists that “every minor change will affect the competitiveness of our industry”. “We are an integral part of European car manufacturing.”
Works both ways
It works in both ways. Eight out of ten cars in the UK are imported, 75% of them from the EU. On top the UK imports three times more parts from the continent than it exports.
Brexit without an agreement with Europe would cost the British sector 4,5 billion pounds (5,1 billion euro) in accumulated customs duties, which would come to an average of 1.700 euro per car.