Nissan Motor Co Ltd. (TYO:7201) has issued a warning, saying that possible tariff and the uncertainty following Brexit may damage the future of investments in the largest car factory in the United Kingdom. The company says that there has to be more clarity about trade relations with the EU post-Brexit. Otherwise, Nissan might have to scrap their investment plans in the country.
Carlos Ghosn, the Chief Executive, also says that Nissan needs to be compensated for possible tax barriers after Britain decided to leave the Union. Ghosn said that if tariffs are imposed, then London has to guarantee us compensation. “If the British government cannot respond…we will not go ahead”, he commented.
The CEO says that Nissan wants to stay and are happy to stay. The company has a good plant in the country that is productive and profitable. But we cannot do business if the conditions are not friendly.
The UK car industry has also issued warnings about the risks of European Union tariffs. 80 percent of the cars made in the UK are exported to mainland Europe.
Nissan, an Important Investor in the United Kingdom
Nissan’s investments are important for the United Kingdom. The company makes about one-third of all cars made in the UK at their plant in Sunderland. The Sunderland plant of Nissan has the capacity to make 500,000 cars every year. It employs 6,700 people.
However, the company’s plant will “lose competitiveness” if a 10 percent import tariff was imposed by the EU on all cars coming in from the United Kingdom. Incidentally, Nissan also makes France’s Renault.
Car industry in the UK employs about 800,000 people.
Ghosn was speaking at the sidelines of the Paris motor show on Thursday. While answering a question on where the company plans to make their new SUV, Qashqai, he reiterated the company’s stand by saying that “We will not make an important investment decision in the dark”.
Quick Decision Required
We have to make a deal with the UK, he added. The government has to decide now because Nissan (TYO:7201) cannot wait till the end of Brexit. Ghosn added by saying that “We need a statement from the UK soon”. Honda, the car maker from Japan, has also asked the UK government to take a quick decision.
Nissan will decide where to make the Qashqai SUV in early 2017. The company wants a decision preferably before that.