British firm expects to pay huge sum in vehicle export tariffs if Britain leaves Europe without a deal
22 May 2020

Jaguar Land Rover’s chief financial officer has admitted that if the UK “crashes out” of the EU with no deal, it would cost the firm £500 million per year in tariffs on vehicle exports alone.

Autocar found the remarks in a record of a meeting between Adrian Mardell and investment banks at the end of January. Mardell said he “fully expects” the current transition period to last until 1 January 2021, after which there will be “a different relationship”.

Mardell also said: “We’ve gone through two versions of potential crash-outs already, in the end of March [2019] and the end of October, and what we did was to protect ourselves by closing the plant for a week.

“We’ll decide at the back end of this calendar year whether that’s an appropriate measure. If we do crash out, if we go to WTO [World Trade Organization rules]… it’s about a £500m duty hit – £40m a month.”

It’s rare for a senior figure at a major car maker to quantify the cost of a no-deal Brexit and resultant use of WTO rules. But Mardell also reckons that if the UK does find itself in this situation, it won’t be for long.

“I don’t personally believe that we’d really be at those WTO levels for a significant period of time,” he said. “I think it would be a negotiating position which is negotiated away by one side or the other. I’m much more relaxed about it than I would have been two years ago, actually.”

JLR has now furloughed around 50% (20,000) of its non-critical workers during the coronavirus crisis, although it’s paying 100% of their salaries this month. Board-ranking executives have deferred their salary payments for three months, with CEO Ralf Speth’s pay being reduced by 30%.

The pandemic has had a significant effect on already-falling sales, too. The latest figures for the 2019/2020 financial year reveal JLR sold 508,659 vehicles, down 12.1% on the same period the year before. A more significant dent was made in the last financial quarter, between January and March, with sales down 30.9% year on year to 108,869.

The figures vary between brands. Jaguar’s sales took a particular hammering, down 22% overall in the year and 42.6% in the last quarter, at 28,288. Land Rover, by comparison, was down 7.7% and 25.6% respectively, selling 81,581 cars in the last quarter.

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The company is quick to point out its relative successes amid the doom and gloom, though. Range Rover Evoque sales were up by a quarter and Jaguar I-Pace sales increased by 40%. JLR also claims to have ended the financial year with £3.6 billion of cash and unaudited short-term investments, and an undrawn credit facility of £1.9bn.

JLR has announced its aim of resuming production in Austria, Slovakia and Solihull from 18 May. Other European plants will open gradually “in due course”, with work going into making the factories as safe as possible under social distancing measures. It’s expected that production will ramp up slowly, however, meaning a sales recovery will take time.

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Comments
39

22 May 2020
Works out at about £1k per vehicle. Will get lost in the cost of a lease or PCP.

22 May 2020
NavalReserve wrote:

Works out at about £1k per vehicle. Will get lost in the cost of a lease or PCP.

Agreed if those numbers are right Brexit will cost us all more money and make us poorer with the cost past on to us all. Just what the country needs as we recover from Covid 19.

Of course we could drop all tarrifs to avoid delays at the border, another possibility that's been mentioned. That would then just kill our negotiating position and flood the UK with cheap imports destroying jobs in place like Newcastle and Sunderland.

either way we lose. Ultimately do I have faith in a government which has delivered Europe's largest death toll from Covid 19? Which was late to react in the first place and woefully underprepared? No I don't but apparently half the country does.

 

 

22 May 2020
TStag wrote:

NavalReserve wrote:

Works out at about £1k per vehicle. Will get lost in the cost of a lease or PCP.

Agreed if those numbers are right Brexit will cost us all more money and make us poorer with the cost past on to us all. Just what the country needs as we recover from Covid 19.

Of course we could drop all tarrifs to avoid delays at the border, another possibility that's been mentioned. That would then just kill our negotiating position and flood the UK with cheap imports destroying jobs in place like Newcastle and Sunderland.

either way we lose. Ultimately do I have faith in a government which has delivered Europe's largest death toll from Covid 19? Which was late to react in the first place and woefully underprepared? No I don't but apparently half the country does.

 

 

And where would you like to live?

22 May 2020
TStag wrote:

NavalReserve wrote:

Works out at about £1k per vehicle. Will get lost in the cost of a lease or PCP.

Agreed if those numbers are right Brexit will cost us all more money and make us poorer with the cost past on to us all. Just what the country needs as we recover from Covid 19.

Of course we could drop all tarrifs to avoid delays at the border, another possibility that's been mentioned. That would then just kill our negotiating position and flood the UK with cheap imports destroying jobs in place like Newcastle and Sunderland.

either way we lose. Ultimately do I have faith in a government which has delivered Europe's largest death toll from Covid 19? Which was late to react in the first place and woefully underprepared? No I don't but apparently half the country does.

 

 

22 May 2020
TStag wrote:

NavalReserve wrote:

Works out at about £1k per vehicle. Will get lost in the cost of a lease or PCP.

Ultimately do I have faith in a government which has delivered Europe's largest death toll from Covid 19? Which was late to react in the first place and woefully underprepared? No I don't but apparently half the country does

Suggest you learn a bit more about statistics and population size before posting next time. And that's before taking into account different recording methods

24 May 2020
xxxx wrote:

TStag wrote:

NavalReserve wrote:

Works out at about £1k per vehicle. Will get lost in the cost of a lease or PCP.

Ultimately do I have faith in a government which has delivered Europe's largest death toll from Covid 19? Which was late to react in the first place and woefully underprepared? No I don't but apparently half the country does

Suggest you learn a bit more about statistics and population size before posting next time. And that's before taking into account different recording methods

 

i acknowledge my ignorance here. Sweden has the highest death rate per capita in Europe due to their complete and utter incompetence failing to even bother with a lockdown at all. Brexit Britain came second per capita.

yes I now have total confidence in Boris to deliver Brexit he's only the second most incompetent leader in Europe after all.

 

22 May 2020
£500million per year is about 3 weeks EU membership (@ about £160m / week) and that's just the cost to one company (and excludes the impact on sales caused by 10% tariffs on exported vehicles). I wonder what the cost is if you add up the rest of the automotive sector, aerospace, pharmaceuticals etc? I've a feeling it will make the savings on EU membership fees look trivial.

22 May 2020

That might cost more in the long run

22 May 2020

There is Inward Processing Relief where basically a UK manufacturer claims the component tariffs back when a vehicle is subsequently exported (no use if sold in the UK market) but it just adds to cost/complexity/pen pushing, especially when HMRC is understaffed and under resourced, and makes UK manufacturing/tax revenue/jobs less attractive but of course certain politicians have paymasters who will benefit from all this havoc. 

22 May 2020

There is Inward Processing Relief where basically a UK manufacturer claims the component tariffs back when a vehicle is subsequently exported (no use if sold in the UK market) but it just adds to cost/complexity/pen pushing, especially when HMRC is understaffed and under resourced, and makes UK manufacturing/tax revenue/jobs less attractive but of course certain politicians have paymasters who will benefit from all this havoc. 

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