Japanese carmakers urge Abe to warn May against no-deal Brexit
Last Modified: 11:00 PM, Wed Jan 09, 2019

Peter Campbell in London

FT.com. 10 January 2019
Honda, Nissan and Toyota worry about impact of UK crashing out of EU

Japanese carmakers with UK factories want their prime minister Shinzo Abe to stress to his British counterpart Theresa May the need to avoid a no-deal Brexit when the pair hold talks in London on Thursday, according to people close to the companies.

Honda, Nissan and Toyota are worried that if the UK crashes out of the EU without an agreement, it would cause massive disruption for their operations, partly because many of the cars they make in Britain are dispatched for sale in continental Europe.

About 80 per cent of Toyota’s UK-made vehicles are exported to the EU, compared with 55 per cent of Nissan’s and 40 per cent of Honda’s.

The three Japanese carmakers are keen to see the UK prime minister’s Brexit deal approved by parliament, but with MPs expected to reject it next week in a Commons vote, the companies are concerned about the risk of Britain leaving the bloc without an agreement.

The UK plants operated by Honda, Nissan and Toyota are heavily dependent on seamless trading arrangements with the rest of the EU based on the bloc’s single market.

This framework would continue during a Brexit transition period lasting until at least December 2020 in Mrs May’s deal, although the long-term trading arrangements have yet to be agreed between the two sides.

Mrs May’s withdrawal agreement with the EU is expected to be a key topic in her talks with Mr Abe on Thursday.

An executive with one of the Japanese carmakers said: “[Mrs May’s Brexit deal] doesn’t cover everything, but gives stable conditions to the end of 2020 . . . It is a good step forwards.”

The executive added that the benefits of a future trade deal between the UK and Japan would be “far outweighed” by tariffs placed on British-made cars in a no-deal Brexit.

Another executive at a different Japanese carmaker, referring to his company’s concerns about the risk of the UK crashing out of the EU without an agreement, said: “We have made our opinions clear to the [British] PM, both directly and indirectly, so we very much hope that Prime Minister Abe will be reiterating those points.”

In October, the Japan Automobile Manufacturers Association, which is led by Toyota chief executive Akio Toyoda, warned the UK government to avoid a no-deal Brexit “at all costs”.

Honda, Nissan and Toyota have made additional investments in their UK factories since the 2016 Brexit referendum, but, like most carmakers in Britain, they have also announced contingency plans to minimise disruption to their operations in the event of a no-deal Brexit.

For example, Toyota has warned that it would be forced to halt production at its British plant near Derby because of anticipated difficulties in continuing to import car components on a “just in time” basis.

Honda has meanwhile invested in additional warehousing space to stockpile components in the UK because of the risk of customs delays at borders.

Nissan has delayed pay talks with its UK workers until the terms of Brexit become clearer.

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The Financial Times Ltd.
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Publication: FT.com
Organization: Japan Automobile Manufacturers Association, Toyota Motor Corp, Honda Motor Co Ltd, European Union, Nissan Motor Co Ltd
Location: Japan, UK, Europe
People: Akio Toyoda, Theresa May, Shinzo Abe, Peter Campbell
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