Japan’s two biggest automakers, Toyota and Nissan, will ask Britain to reimburse them for additional custom charges incurred if the UK government fails to reach a Brexit trade deal with the European Union, according to reports.
The companies – which have car plants in Burnaston and Sunderland respectively – want payments to cover the additional 10 per cent tax on exported vehicles to Europe should Britain crash out of the EU without a trade agreement, says business publication Nikkei.
Officials for the car makers declined to comment on the report, though Nissan expressed concern about the potential impact of a no-deal Brexit on its business.
‘We urge UK and EU negotiators to work collaboratively towards an orderly, balanced Brexit that will continue to encourage mutually beneficial trade,’ Nissan said.
Boris Johnson said on Sunday that he did not particularly want the Brexit transition period, which elapses on 31 December, to run out without a trade deal in place, but that Britain could live with such an outcome.
The Nikkei report, however, underscores how a failure to agree a new trading relationship could prompt foreign companies operating in Britain to reconsider the viability of operations in the face of extra tariffs that erode profitability, and customs checks and regulations that slowed operations.
New cars imported from the EU to the UK would also incur the same 10 per cent tariff, which will be imposed as part of World Trade Organisation (WTO) rules if a trade deal can’t be struck.
Many car makers have warned that they are unlikely to absorb these additional charges and instead hike the price of their new models so customers have to pay the difference.
According to the latest reports, this will see the price of an average family car increase by £1,800.
You can find out which brands are set to increase model prices next year in our full report.
Toyota operates a plant in Derbyshire, central England, and produced roughly 8 per cent of the 1.52 million cars made in Britain in 2018.
In June, the Japanese firm announced it had produced is 4.5 millionth UK car since the Burnaston factory opened in 1992.
It also produces engines at a factory in Wales.
Nissan has the UK’s largest single manufacturing plant in Sunderland, north-eastern England, which employs 7,000 staff.
Only Jaguar Land Rover produced more cars in Britain than Nissan last year.
The Sunderland factory – where the Qashqai and Juke compact SUVs are built, along with the Leag electric car – would be ‘unsustainable’ if Britain leaves the EU without a trade deal, Nissan said in June.
The Japanese brand confirmed in March that it was pushing ahead with plans to build its new Qashqai in Sunderland.
When it first announced the £52million investment in 2016, the car maker said it had won reassurances from the British government that Brexit would not affect its competitiveness.