Toyota Demands ‘Clarity’ Over Brexit

Toyota Demands ‘Clarity’ Over Brexit

- in Automotive
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He also voiced worry that import tariffs or other new costs arising from Brexit would make manufacturing in Britain less attractive, implying that investment in operations in the country might be reduced in future. “If we move to something like an import tax, trade tax or any kind of additional penalty, it will create a big negative impact in terms of competitiveness,” Mr. Leroy said.

His remarks echo the concerns of Japanese and other automakers in Britain, like Germany’s BMW, which makes the Mini in the country. They worry that Brexit could add to their costs and complicate the flow of vehicles, components and employees between Britain and the Continent.

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Indeed, if the British government does not manage to negotiate barrier-free access to the European market after Brexit, vehicles made in the country “may face an import tariff” of perhaps 10 percent, according to Peter Wells, a professor at the Cardiff Business School. That could hurt the competitiveness of mass-market manufacturers’ Britain-based operations.

Toyota, he said, may be particularly vulnerable because it manufactures both cars and engines in Britain. A high proportion of British content might put the company’s vehicles into a foreign-made category elsewhere in Europe.

So far, carmakers in Britain have been patient, and moved ahead with investments necessary to keep their plants on track.

Toyota, for instance, said in March that it would invest 240 million pounds, or $315 million, to upgrade its plant in Burnaston, England, with the British government kicking in a further £21 million for items like training and research.

Overall investment, though, appears to be sliding downward.

According to the Society of Motor Manufacturers and Traders, a trade group, publicly announced investments in the British car industry fell to £1.7 billion last year, from £2.5 billion in 2015. That trend appears to be accelerating, with the figure totaling £647 million in the first half of this year. The trade group attributes the falling numbers to the carmakers holding back from commitments until they see how Brexit is likely to play out.

“I think the issue is clarity more than anything else,” Mr. Wells said. Without knowing what sort of arrangements will emerge from Brexit, he added, the industry would find it difficult to plan ahead and make long-term investment decisions.

Car manufacturing in Britain employs about 170,000 people, according to the trade group. Largely because of the stakes involved, the government has provided aid to Toyota and other companies, and is backing research into electric, hydrogen-powered and self-driving vehicles.

Still, negotiations between Britain and the European Union have been agonizingly slow so far, with both sides seemingly unable to move into the meat-and-potatoes talks that will address the terms that businesses based in Britain will face after Brexit.

Companies like Toyota, however, are quite clear in describing their needs.

In an email, Chris O’Keefe, a Toyota spokesman, listed “trade and barrier-free market access” and “uncomplicated and predictable customs arrangements” as “vital for future competitiveness.”

Correction: October 25, 2017

An earlier version of this article misstated the name of one of the models that Toyota builds at its British plants. It is the Avensis, not the Aventis.

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