If Nissan gets a Brexit compensation deal then other automakers would need a level playing field, Britain’s biggest carmaker Jaguar Land Rover said  that it will “realign its thinking” on investment after Britain’s vote to leave the EU.

Signs that some customers in Europe, Jaguar Land Rover’s biggest market, no longer wanted to buy British cars, were emerging, said Chief Executive Ralf Speth.

Without a pledge of compensation for tariffs imposed on UK-built cars in the event of a ‘hard Brexit’, he would halt new investment in Britain, Nissan Chief Executive Carlos Ghosn, said on Thursday and Speth responded to that comment.

“We are the only car manufacturer in the UK to do all the work in terms of research, design, engineering, production planning in the UK,” Speth said.

“We want to have fair treatment and a level playing field at the end of the day,” he said.

There are growing concerns among carmakers about the implications of a ‘hard Brexit’, which would leave firms paying tariffs to export UK-assembled cars to EU markets, even though Britain is not expected to begin formal divorce talks from the European Union until 2017, which will last two years.

Volkswagen-owned brand Skoda urged Britain, Europe’s second-largest car market, to clarify the situation as soon as possible and carmakers Nissan and Toyota both warned on Thursday that tariffs could hurt production in Britain.

Britain’s business ministry did not respond to multiple requests for comment.

A double hit in the event of ‘hard Brexit’ with tariffs on exported cars and imported parts and technology hurting competitiveness would be faced by Jaguar Land Rover (JLR), which built one third of Britain’s 1.6 million cars last year, Speth said.

“If we face higher tariffs than anybody else then it’s quite clear that it’s reducing the competitiveness of our products especially in Europe. The order of magnitude cannot be calculated right now,” he said.

Media has reported in June that if Britain returned to WTO tariffs of 10 percent, according to internal documents, the firm estimates its annual profit could be cut by 1 billion pounds ($1.3 billion) by the end of the decade.

Referring to comments by European sales representatives, Speth also raised concern that in the wake of the Brexit vote, some European consumers might be shunning British brands.

“They have the very first customers in their showrooms (who) clearly highlight that they don’t want to buy British products any more,” he said.

And years of recent progress with output currently expected to reach a record high of 2 million by 2020 could be undone by any blow to the British car industry, which was dogged by wild-cat strikes and poor productivity in the 1970s and 1980s.

The firm would now have to think again after Britons backed leaving the European Union on June 23 even as its long-term investment strategy has not changed as a result of the vote, JLR said.

“We have to realign all of our thinking and work on how to handle this Brexit best,” Speth said. Asked if that included investments, he replied: “Everything.”

Seeing benefits from open trade and standardized rules, big carmakers backed continued membership during the campaign, and over 800,000 jobs depend on Britain’s overwhelmingly foreign-owned car industry.

A lack of clarity over a potential deal risked future growth, warned Britain’s car industry body the Society of Motor Manufacturers and Traders.

“The current uncertainty is not conducive to attracting manufacturing investment to the UK,” Chief Executive Mike Hawes said.

(Adapted from Reuters)

Categories: Economy & Finance, Geopolitics