Asian car makers may slow investments in UK after Brexit

Fri Jun 24, 2016 4:50am EDT
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By Norihiko Shirouzu

BEIJING (Reuters) - Executives at Asian automakers with factories in Britain, largely set up to export to the European Union, say they could slow investments in Britain or even put them on ice for now, after the country voted to leave the 28-nation bloc.

Automakers, including Toyota (7203.T: Quote) and Nissan (7201.T: Quote), had been among the manufacturers that have warned that a period of uncertainty would follow a Brexit vote, as trade and labor deals with Europe are renegotiated. Most on Friday estimated it could take around two years.

Toyota and Nissan had said in the run-up to the vote that continued membership of the European Union was preferable for their operations: a vote to leave would create new challenges for an industry that employs some 800,000 people in Britain.

Even so, Sunderland in northern England, where Nissan has its operations, was among the constituencies that surprised pundits by the extent to which voters supported an exit.

Shares in all Asian automakers tumbled.

"We don't have any choice but to be more cautious with our investment decisions, including moves like whether to produce a new or significantly redesigned vehicle model in the UK," said one official at a global automaker with manufacturing capacity in Britain, speaking on condition of anonymity.

Tata Motors' (TAMO.NS: Quote) Jaguar Land Rover (JLR) is Britain's largest carmaker, followed by Nissan, which has been in Britain for three decades and makes 475,000 cars a year in the country, most of them for export inside the European Union and beyond.

According to sources familiar with the company, JLR has estimated its annual profit could be cut by one billion pounds ($1.47 billion) by the end of the decade as a result of Brexit. It said on Friday it remained committed to Europe.   Continued...

Toyota Motors Corp company logo is pictured on a Hilux pickup at its dealer Toyota Bicutan in Paranaque, Metro Manila, Philippines June 16, 2016.   REUTERS/Erik De Castro