Exclusive: Jaguar Land Rover could face 1-billion-pound Brexit hit - sources

Tue Jun 21, 2016 10:18am EDT
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By Costas Pitas

LONDON (Reuters) - Jaguar Land Rover, Britain's biggest carmaker, estimates its annual profit could be cut by 1 billion pounds ($1.47 billion) by the end of the decade if Britain leaves the European Union, according to two sources familiar with the company's thinking.

The worst-case-scenario estimate is in internal documents seen by both sources that were prepared by the firm's chief economist, David Rea, to outline the possible consequences if Britons vote to leave the world's biggest trading bloc in Thursday's referendum.

It gives an insight into the level of concern at a major company about the uncertainties of a future outside the EU.

The rapidly-expanding firm, which traces its history back to 1922 and is headquartered in Coventry, central England, has also looked into opening a European office were Britain to quit the bloc, both sources said.

It has also put on hold starting major work on a plant in Slovakia announced in December as well as negotiations on a deal to lease property at Silverstone race track because of the uncertainty surrounding Thursday's vote, they said.

The 1 billion pound decline in pre-tax profit by 2020 would apply if Britain returned to World Trade Organisation rules for trade with Europe, involving a 10 percent tariff on exports and an inbound tariff of roughly 4 percent on components, the sources said.

"It may at worst cost us about 1 billion pounds," said one of the sources when asked how Jaguar Land Rover (JLR) had phrased the wording in the 89-page report, entitled 'Referendum: The View'.

A second source said the number had featured in an internal presentation shown to the board.   Continued...

The Land Rover Defender is presented during the media day at the Frankfurt Motor Show (IAA) in Frankfurt, Germany September 16, 2015.  REUTERS/Kai Pfaffenbach/File photo