Nissan: No-deal Brexit tariffs unsustainable

No-deal Brexit tariffs of 10 percent on vehicles would be unsustainable for Nissan in Europe, where it runs the United Kingdom‘s biggest car factory, the Japanese company warned on Thursday.

The carmaker made nearly one in three of the UK’s 1.5 million cars last year at its northern English Sunderland plant, although annual production levels at the site will drop this year.

Nissan, which was encouraged in the 1980s by then-Prime Minister Margaret Thatcher to use Britain as a gateway to the continent, has spent 100 million pounds ($125m) on investment in a new Juke model, due to begin production next week.

But the autos sector, the UK’s biggest exporter of goods, is concerned that World Trade Organisation tariffs of 10 percent on vehicles alongside new customs checks and delays could halt production if there is a disorderly Brexit on or before October 31.

“If we are in a situation in which tomorrow we will have to apply 10 percent export duties to 70 percent of our production, the entire business model of Nissan in Europe will be in jeopardy,” the firm’s European Chairman, Gianluca De Ficchy, told reporters.

“If there will be a no-deal – and a no-deal will be associated with World Trade Organization tariffs application – that won’t be sustainable for us,” he added.

UK Prime Minister Boris Johnson has said he is prepared to take the UK out of the European Union without an agreement but is seeking a deal with the bloc, although time is running out to secure an orderly departure before the deadline in three weeks.

Ministers have said they are prepared for a no-deal outcome and could help affected sectors. Brexiteers have long argued that Europe’s biggest economy, Germany, which exports hundreds of thousands of cars to the UK each year, would protect that trade.

Nissan said it was examining a host of scenarios and wants the tariffs not to be applied if the UK leaves the bloc without an agreement.

“We are asking not to have tariffs being applied in a no-deal scenario because otherwise the tariffs won’t be sustainable for us,” De Ficchy said.

In 2016, Nissan said it would build its next-generation Qashqai vehicle at the factory, key to maintaining staff levels of about 6,000 people at the site and an example of how far in advance major decisions are taken.

The assumption is that investment will go ahead, De Ficchy said on Thursday. But he warned that Nissan would need to react if there were a no-deal outcome, although decisions involving plants might take time.

“We are conscious about the need to react quickly,” he said. “But at the same time, no quick decision may be taken because the complexity around that scenario is really big.”