Brexit conclusion fails to clear up carmaker confusion

3 February 2020 While the UK officially left the European Union on 31 January, vehicle manufacturers will have to wait until the end of the year for a detailed trading agreement with the bloc. However, some are already making plans to increase production or delay models in the country. Nissan could be about to use Brexit to its advantage, in a move that would secure the future of its plant in Sunderland. For some time, its UK factory has been rumoured to be at threat in a round of cuts the carmaker is looking to implement. It lost a contract to produce the X-Trail model for Europe, while the Japanese firm was said to be considering moving SUV production to Spain. However, reports in the Financial Times suggest an alternative scenario in which the carmaker could instead close its European plants, and invest in Sunderland, taking advantage of Brexit to increase its foothold in the UK market. The theory suggests that in the event of a no-deal arrangement, manufacturers will need to take import and export tariffs into account, and vehicle prices will rise as a result. Those already building in the UK will need to increase prices on all vehicles to cover the cost of their exports to the EU while carmakers without UK plants will need to do likewise. However, Nissan can exploit Japan’s free-trade deal with the EU for continental models, and focus Sunderland on building for the UK, meaning there will not be an impact from potential tariffs. Nissan’s public position is that the UK plant would be threatened along with its European business if the UK fails to maintain tariff-free access to the EU. ′We deny such a contingency plan exists,’ a spokesman for Nissan Europe told the newspaper. ′We’ve modelled every possible ramification of Brexit, and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs. We continue to urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade.’ Sunderland is equipped to make 600,000 vehicles a year and presently produces around 350,000. The carmaker sold just over 92,000 models in the UK during 2019. Under the potential plans, models including the Micra and the X-Trail would move to the factory for the UK market. Launch delays Meanwhile, BMW has delayed development on its next-generation Mini, referencing Brexit as the main factor in its decision. The German carmaker is seeking to cut costs, and with uncertainty over the UK’s future trading deal and rules integration continues post-Brexit, long-term investment decisions are harder to make. The current model, the third-generation Mini, has been on the market since 2014. ′The lifespan of this platform has been extended,’ BMW spokesman Maximilian Schoeberl told Reuters. ′For cost reasons and because of Brexit.’ With pressure increasing on manufacturers to lower CO2 emissions, development budgets for electric vehicles, together with connected and autonomous strategies that some are pursuing, are hitting overall profits. Any potential savings, therefore, must be made and with Brexit still casting a shadow over the automotive industry, investment in the UK is likely to be slow.