Brexit: Toyota says no-deal outcome will be ‘very negative’

The boss of Toyota’s European business has warned that a no-deal Brexit could make its UK plants uncompetitive.

Dr Johan van Zyl said such an outcome would create a “very negative investment environment” in Britain and be “very, very negative” for his business.

He told the BBC the combination of Brexit and the Covid crisis was a “double whammy” for the carmaker.

Toyota has two plants in the UK, which employ about 3,000 people in total.

But Mr van Zyl said no decisions on the future of its UK plants – a car factory at Burnaston in Derbyshire and an engine facility at Deeside in North Wales – could be taken until the outcome of trade talks was known.

Like other manufacturers, Toyota has been badly affected by the Covid outbreak. Both its UK plants were forced to suspend production during the spring lockdown, while showrooms were also forced to close.

Now the company is forecasting a strong recovery for its European business. But according to Dr van Zyl, its UK recovery could be made more difficult by Brexit.

“We have Brexit, and we have Covid, and this is a double whammy which is happening to us”, he said during an online media event.

“When it comes to the recovery… it’s going to be more difficult if Brexit of course is negative, or a hard Brexit”.

The company has, he said, already taken steps to mitigate the impact of a no-deal scenario – but there is a limit to what it can do.

“What we could put in place, we have done – in terms of adjusting our systems, looking at customs procedures which will be required, looking at increasing stock levels.

“Up to a point we can do it. But you can’t do a huge amount of that – it’s only a limited few days.

“So it can be very, very negative for our business if we have a no-deal scenario. Very negative. And even if there is a deal, we need to know the content of the deal. We need to get those details to really be able to establish what is the real impact. We haven’t seen those yet”.

It is not yet clear what the future holds for Toyota’s UK plants. The company recently invested £240m in equipping the Burnaston factory to build its latest vehicle platforms.

Dr van Zyl insists that: “We have confidence in our colleagues in the UK. They’re doing an excellent job so far”.

But the longer-term outlook may be bleaker, in an industry where product cycles tend to last around seven years.

“We have always said that if, for instance Brexit, is very negative, it will be a very negative investment environment, so we need first to see the outcome before we can judge what we are really going to do”, he says.

Tariffs on cross channel trade, he explains, could make a big difference.

“If 90% of what you produce in the UK is exported to the EU, and you’ve got to do it at a duty, then you’re not competitive. You will not be able to compete with plants in Europe. So it is a very difficult situation

“But let’s see what the outcome of the negotiations is, then we can really decide what we’re going to do.”