Nissan kicked off production of the European version of its new Juke sport-utility vehicle in northern England as questions swirled about the potential impact Brexit will have on its operations there.
The Sunderland plant is the largest automotive factory in Great Britain and Nissan committed to building the new Juke there in 2015 — a year before the country voted to leave the European Union. The plant, which exports 70% of its output to Europe, got a $100 million upgrade to build the new ute.
However, the Japanese automaker was set to build its new Qashqai small SUV there starting next year, but those plans are on hold pending the outcome of Brexit.
British Prime Minister Boris Johnson has said he’ll take Great Britain out of the EU on Oct. 31 deal or no deal. However, he is attempting to reach a deal with the trade bloc, but time is of the essence.
Auto executives have repeatedly expressed concerns about the repercussions of a no-deal Brexit. Those fears include prohibitive tariffs and untenable delays resulting from mandatory customs inxpections.
Several automakers, including Honda, Jaguar and Ford, have already trimmed operations in Great Britain in advance of Brexit. Others, like Nissan, are waiting to see what will happen before making a decision, or further decisions, about what to do.
Automakers are worried that a no-deal Brexit means a default to World Trade Organization tariffs of 10% on vehicle exports. That combined with the aforementioned customs checks and subsequent delays could hinder and even halt production after Oct. 31.
“If we are in a situation in which tomorrow we will have to apply 10% export duties to 70% of our production, the entire business model of Nissan in Europe will be in jeopardy,” Nissan’s European Chairman Gianluca de Ficchy told Reuters.
“If there will be a no-deal – and a no-deal will be associated with WTO tariffs application – that won’t be sustainable for us.” He added that the company essentially wants no tariffs to be imposed in the event of a no-deal option.
In the interim, other automakers are readying for Brexit. Jaguar Land Rover plans to shut down production at its plants in Great Britain for a week in November, following the example of two other automakers.
BMW and Toyota have already announced plans to shut down their plants for a week.
Shutting down the plans will help ensure that JLR will have enough components in the pipeline, ensuring a continuous build process. CEO Ralf Speth said the four plants will shut down the first week of November.