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Nissan says the UK car industry needs £100 million of government support to survive Brexit

(8 Views) March 1, 2017 8:22 am | Published by | No comment

Nissan technicians prepare doors for the Qashqai car at the company's plant in Sunderland, Britain, November 9, 2011.

REUTERS/Nigel Roddis/File Photo

Nissan technicians prepare doors for the Qashqai car at the company’s plant in Sunderland.

LONDON — Nissan told MPs that the UK car industry needs the government to spend at least £100 million ($ 123.6 million) on attracting car part manufacturers to Britain or risk a “house of cards” collapse in the sector post-Brexit.

Colin Lawther, Nissan’s head of European manufacturing, told MPs on the International Trade committee that the industry was making a “strong request” for supply chain investment of between £100 million and £140 million, according to the Guardian.

Lawther said Nissan sources 85% of its car parts in the UK from outside of Britain and if more were made in the UK then Nissan alone would spend £2 billion more in the UK.

As well as offering the incentive of more inward investment, Lawther also warned MPs that a failure to invest could be disastrous for the sector. He told MPs according to the Financial Times: “This is critical. If we don’t really invest in the supply base it will be a house of cards effect. Nissan will not succeed in the future, with or without Brexit, unless the government does something to help us in the supply chain.”

The key issue is tariffs. If the UK cannot agree a favourable trading deal with Europe quickly, then car manufacturers will have to swallow large increases in import costs for car parts. Lawther estimated it could cost Nissan alone as much as £600 million, according to the FT, and the Society of Motor Manufacturers and Traders (SMMT) estimated last year the cost to the entire industry could be as high as £4.5 billion.

Worryingly for the industry, Prime Minister Theresa May has warned that Britain will exit the EU with no deal on trade — falling back on World Trade Organization rules — if it cannot secure a good deal.

Lawther told MPs at Tuesday’s hearing that Nissan had made “a strong request” to the government to remain in the EU customs union, the Guardian reports, warning that falling back on WTO rules would be a “disaster.” Car industry bosses warned Brexit secretary David Davis last year that the sector would “bleed” unless a favourable transition deal could be worked out.

Last year Nissan received an alleged “sweetheart deal” from the government, getting private assurances over Brexit that helped convince it to retain a manufacturing base in Sunderland. Lawther told MPs that the government “gave assurances that we would have a competitive trading environment at the end of the process,” according to the FT.

Lawther said he “wouldn’t say” the future of Nissan’s Sunderland plant is safe, adding that Nissan will continue to review the logic of its investment and presence in Britain. Outgoing CEO Carlos Ghosn said in January that the company would review its UK operations once the final terms of Brexit became clear.

Earlier this week reports emerged that BMW could move production of its electric Minis out of Britain and to Germany over Brexit fears.

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