Toyota to reconsider future investment in the UK in the event of no-deal Brexit

Toyota Motor may reconsider future investment in the U.K. if the country leaves the European Union without an agreement, say executives

Toyota Motor will have to reconsider future investment in the U.K. if the country leaves the European Union without an agreement with the bloc, executives have said.

Production in the country will be suspended for “a few days or weeks” in such a scenario, warned Executive Vice President Didier Leroy, chairman of Toyota Motor Europe. A no-deal Brexit will cause “big trouble” for everyone in logistics, with “no way” to avoid it, he said.

Toyota does not have much reason to “take a tough decision” on U.K. production facilities if they “can stay competitive,” Leroy said.

A lack of competitiveness can create a situation where Toyota will “very seriously need to look at business and future investments,” said Johan van Zyl, president and CEO of Toyota Motor Europe.

Toyota’s Burnaston plant in the central U.K. built 144,000 vehicles in 2017. It procures the bulk of its parts from the EU, and 80% of its finished vehicles go to 27 EU countries. Four hours of parts are kept on hand to keep efficiency high.

Fifty trucks a day cross the Strait of Dover to deliver parts to the Toyota plant. Disruption in the flow is sure to lead to an immediate suspension of auto production.

Speaking to reporters on the eve of an international auto show, Leroy called on the British government to maintain the free flow of goods.

Toyota announced last year an additional investment in the Burnaston plant. It is preparing to build there the redesigned Corolla.

The automaker had anticipated high levels of output in March 2019, when the U.K. is set to exit the EU.

Talking of the potential loss, van Zyl said it is difficult to say, but it will be quite substantial, it will be massive. He said they are producing 600 vehicles a day” and “can’t afford this type of disruption.

Touching on how Australia no longer has an auto industry after Toyota and other major automakers stopped producing there, he warned that he cannot say for sure that the same cannot happen in the U.K.

BMW has decided to halt production at its Mini plant in Oxford for a month starting next April. It will bring forward an equipment maintenance period planned for summer to prepare for the complications that may accompany a no-deal Brexit.

Leroy did not rule out such a measure by the Japanese automaker but said it is too early to decide.

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