Toyota Is Latest Automaker to Raise Alarm Over a No-Deal Brexit

March 5, 2019, 12:15 PM UTC

In the latest Brexit-related threat from the auto industry, Toyota has warned that it may not be able to build new models in the U.K. in the event of a no-deal Brexit.

The Japanese carmaker last year pleaded with the British government to avoid a no-deal Brexit, but its warning became more concrete on Tuesday.

If the British Parliament does not green-light the Brexit deal struck between Prime Minister Theresa May and her EU counterparts before March 29, and if the British government does not secure an extension of that deadline—an outcome that’s looking ever more likely—then the default outcome will be that the U.K. crashes out of the EU with no transition period, leading to massive supply chain disruptions due to border checks and tariffs.

“If we don’t have access to the European market without a specific border tax, it seems to be extremely complicated to think about… [the] introduction of another model,” Toyota Europe chairman Didier Leroy told the Financial Times.

Leroy’s warning was echoed by Toyota Europe president Johan van Zyl, who told the BBC that “if it becomes more difficult in terms of duties or hurdles in trading, then it is very difficult to think about the future.” Van Zyl said that, if Brexit turns out “very negative” then it is possible that work on the existing Corolla model could dry up at the firm’s Burnaston plant in Derbyshire.

Nissan has already abandoned plans to produce a new SUV in the U.K., citing Brexit as a factor. Honda is also shuttering a U.K. plant, though it was at pains to say Brexit was not a factor there—there are other issues afflicting the European auto industry, including a general economic slowdown and uncertainty over new emissions regulations.

The specter of a no-deal Brexit has also hit Aston Martin, due to uncertainty over what will happen to cars shipped after March 29.

Also on Tuesday, BMW CEO Harald Krüger said Mini production in the U.K. would still be disrupted even if Brexit gets delayed. The company long ago scheduled its annual maintenance shutdown for April this year, just after the planned Brexit date. “If Brexit is delayed we can postpone some measures, but the early summer break remains scheduled for April,” Krüger said, according to Reuters.

Securing a delay to Brexit might prove tricky, due to the upcoming European Parliament elections in late May. If the U.K. asks the EU for a short extension, delaying Brexit until just before the newly-elected Parliament begins work at the start of July (without any British lawmakers,) then it would have to give a good reason—after all, the lack of British consensus over the deal thus far does not suggest any breakthrough is forthcoming. If the U.K. wants a longer extension, that would probably mean it has to field candidates for the election, introducing all sorts of new complexities to the equation.

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