Toyota may delay UK Auris decision as Britain talks of possibility of no EU deal

13 March 2017

Toyota has warned it may delay the decision to build the next Auris model at its UK plant until it sees the outcome of Brexit negotiations. 

Toyota currently builds the Auris and Avensis at its Burnaston plant in England, with production of the current Auris model due to end at the turn of the decade. The Avensis is set to be discontinued due to a lack of demand. A decision on building the next Auris there is due as early as next year.  

Executive Vice President Didier Leroy told Reuters that Toyota would ‘probably’ have to make a decision by 2018.  Asked whether the Auris production cycle could be extended and the decision delayed until after the terms of Brexit are clear, Leroy said that while this was not planned, ′it’s possible.’ 

The Brexit agenda in the UK has shifted to the possibility of exiting the EU without gaining a preferential trade deal with the bloc – a scenario no longer seen as a fringe option. UK Brexit secretary Davis Davis told the UK Cabinet, that it should prepare for ′the unlikely scenario in which no mutually satisfactory agreement’ is reached between the UK and the EU. Furthermore, Foreign Secretary Boris Johnson said on Peston on Sunday that reverting to World Trade Organisation (WTO) rules if no deal were reached would be ′perfectly OK’ for the UK. 

May’s spokesman said: ′[Davis] set out the need for the government to support a smooth exit from the EU and in the full range of policy areas that would be affected, and he also pointed out the need to make clear we need to prepare not just for a negotiated settlement but the unlikely scenario where no mutually satisfactory agreement can be reached.’ 

This has sent alarm bells ringing in the UK automotive sector, which supports 800,000 workers; the threat of WTO tariffs both on parts imports and the 1.3 million annual exports, would make the industry less competitive and put jobs at risk. The automotive industry accounts for 12% of the UK’s total export of goods, and its cross-border operations makes it particularly vulnerable to tariffs. Nissan has warned it could take a £400-600 million UK profit hit from the erection of tariffs, and has called for UK government funding to boost the British supplier base to compensate.