Currently reading: Jaguar Land Rover boss issues fresh hard Brexit warning
Hard Brexit tariffs would cost JLR £1.2 billion a year and could force the company out of the UK in the worst-case scenario
Jimi Beckwith
News
3 mins read
5 July 2018

Jaguar Land Rover (JLR) CEO Ralf Speth has issued a warning to the UK government that a so-called hard Brexit could cost the company £1.2 billion per year in tariffs and ultimately force it out of the UK. 

Tariffs on £5bn-worth of imported parts for JLR (40% of the total number of parts used), as well as the 20% of the two brands' production volume, would mount costs for the company, threatening its future operations here. 

Speth warned of the threat to JLR of a no-deal Brexit, saying: “I don’t want to threaten anybody, but we have to make transparent the implications of the move. We want to stay in the UK. Jaguar Land Rover’s heart and soul is in the UK.”

If the only option to save the company post-Brexit were to be moving out of the UK, that would happen, he said. “If I’m forced to go out because we don’t have the right deal, then we have to close plants here in the UK and it will be very, very sad. This is hypothetical, and I hope it’s an option we never have to go for.”

Speth highlighted the company’s progress since 2010, saying: “We built up this company over eight years. All that will be undone. It can go down the river so quickly. We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees."

JLR currently invests around £5bn per year in research and development and its production facilities. As the Jaguar and Land Rover brands grow their electric and autonomous offerings, this investment will grow.

Of particular note was Speth's warning about JLR's importance in fulfilling the Government's ambition for the UK to become a hub of electric and autonomous technology development. “Electrification and connectivity offer significant economic and productivity opportunities. Get Brexit wrong and British people, businesses and broader society lose the chance to lead in smart mobility”, he said.

JLR’s difficulties in recent months have included the decision to lay off 1000 of its 40,000 UK employees amid the diesel downturn and decreased domestic and European demand for its cars.

UK demand fell 21% in the first quarter and registrations fell by 9.3% for Land Rover and 11% for Jaguar across the first six months of 2018. This came despite a booming SUV segment well catered-for by the two brands, with new products in key markets. 

Demand for some of the brands’ top models has blunted early in 2018, and the company blames Brexit and the diesel uncertainty for this instability in its sales. JLR describes this as a short-term problem, however.

Speth’s Brexit threat is just the latest issued to the Government by UK manufacturing giants. SMMT chief executive Mike Hawes has been outspoken on the issue since the referendum in June 2016, while a BMW executive recently called into question the future of Mini and Rolls-Royce in the UK, although this was quickly scaled back by the company's special representative to the UK, Ian Robertson.

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23

5 July 2018

Well, I'm obviously not 'getting' this.  At the moment, JLR buys parts from other EU countries at zero-rate tariff, but has to pay for parts from the rest of the world at the import rate the EU applies.  HOWEVER, when we leave, they will get the favourable rate that the EU WILL give us (remember, it's in the EU's best interests to have an agreed rate, since we import more than we export to the EU) AND we'll have certainly lower rates with other world countries - as the government has stated time and again (we might even have zero rates!).  So leaving the EU is in JLR's best interests...all round.  What part of JLR's concerns am I missing?

5 July 2018
Bazzer wrote:

Well, I'm obviously not 'getting' this.  At the moment, JLR buys parts from other EU countries at zero-rate tariff, but has to pay for parts from the rest of the world at the import rate the EU applies.  HOWEVER, when we leave, they will get the favourable rate that the EU WILL give us (remember, it's in the EU's best interests to have an agreed rate, since we import more than we export to the EU) AND we'll have certainly lower rates with other world countries - as the government has stated time and again (we might even have zero rates!).  So leaving the EU is in JLR's best interests...all round.  What part of JLR's concerns am I missing?

Firstly don't assume the EU will give us 'mates rates'. Germany for example would rather it's car makers pay tarrifs on cars coming into the UK then give the UK a special deal that would threaten the future of the single market and EU.

Secondly a company like JLR has complex supply chains so if it imports goods into the UK it will first have to go through border checks which will slow delivery to the factory gates and disrupt their Just In Time methadologuy of building a car.

Thirdly they will pay duty on some components which they don't now.

Forthly a company like JLR might import a component, do some work on it and then export it again for further work before bringing it back into the UK. At every point it will incur delays and costs.

So for JLR they could just take the view that it's more profitable to move car production to the EU and then just come over the tariff wall and pay the duty in the same way all of their competitors do. They may also take the view that the EU has more negotiating power as one of the worlds largest economies with China, US, etc than little Britain will. So better to be in the same place as their compeition than in the UK.

Whatever way you look at this it's bad new for JLR, Airbus, Nissan, etc. In short they are all better off doing a James Dyson and moving production abroad, and then campaiging with the UK government to drop all tariffs.

 

 

5 July 2018
TStag wrote:

Bazzer wrote:

Well, I'm obviously not 'getting' this.  At the moment, JLR buys parts from other EU countries at zero-rate tariff, but has to pay for parts from the rest of the world at the import rate the EU applies.  HOWEVER, when we leave, they will get the favourable rate that the EU WILL give us (remember, it's in the EU's best interests to have an agreed rate, since we import more than we export to the EU) AND we'll have certainly lower rates with other world countries - as the government has stated time and again (we might even have zero rates!).  So leaving the EU is in JLR's best interests...all round.  What part of JLR's concerns am I missing?

Firstly don't assume the EU will give us 'mates rates'. Germany for example would rather it's car makers pay tarrifs on cars coming into the UK then give the UK a special deal that would threaten the future of the single market and EU...

Love your first sentence "...don't assume..." then in your next sentence you assume.

5 July 2018
xxxx wrote:

TStag wrote:

Bazzer wrote:

Well, I'm obviously not 'getting' this.  At the moment, JLR buys parts from other EU countries at zero-rate tariff, but has to pay for parts from the rest of the world at the import rate the EU applies.  HOWEVER, when we leave, they will get the favourable rate that the EU WILL give us (remember, it's in the EU's best interests to have an agreed rate, since we import more than we export to the EU) AND we'll have certainly lower rates with other world countries - as the government has stated time and again (we might even have zero rates!).  So leaving the EU is in JLR's best interests...all round.  What part of JLR's concerns am I missing?

Firstly don't assume the EU will give us 'mates rates'. Germany for example would rather it's car makers pay tarrifs on cars coming into the UK then give the UK a special deal that would threaten the future of the single market and EU...

Love your first sentence "...don't assume..." then in your next sentence you assume.

 

That's not an assumption. German car makers and the German Chamber of commerce have told Angela Merkle not to risk the integrity of the single market. 

5 July 2018
TStag wrote:

xxxx wrote:

TStag wrote:

Bazzer wrote:

Well, I'm obviously not 'getting' this.  At the moment, JLR buys parts from other EU countries at zero-rate tariff, but has to pay for parts from the rest of the world at the import rate the EU applies.  HOWEVER, when we leave, they will get the favourable rate that the EU WILL give us (remember, it's in the EU's best interests to have an agreed rate, since we import more than we export to the EU) AND we'll have certainly lower rates with other world countries - as the government has stated time and again (we might even have zero rates!).  So leaving the EU is in JLR's best interests...all round.  What part of JLR's concerns am I missing?

Firstly don't assume the EU will give us 'mates rates'. Germany for example would rather it's car makers pay tarrifs on cars coming into the UK then give the UK a special deal that would threaten the future of the single market and EU...

Love your first sentence "...don't assume..." then in your next sentence you assume.

 

That's not an assumption. German car makers and the German Chamber of commerce have told Angela Merkle not to risk the integrity of the single market. 

In so many words? The only thing for certain is they won't want a massive sales slide.

5 July 2018
Bazzer wrote:

Well, I'm obviously not 'getting' this.

Brexiteers don't get economics. Fact.

5 July 2018
Andrew1 wrote:

Bazzer wrote:

Well, I'm obviously not 'getting' this.

Brexiteers don't get economics. Fact.

Remoaners dont half love to whine.. FACT!

5 July 2018
This is nonsense writing.

Tariffs are imposed by the importing country, not the exporting country.

How could EU imposed tariffs be applied to parts JLR imports from the EU?

The press is today, unquestioningly, reporting that JLRs planned investment of £80bn over the next 5year's is under threat.

£80bn - how? On what? That is far more than the entire market capitalisation of Honda or Ford!

5 July 2018
How does £5bn of R&D investment result in £2bn of income tax?

Made up numbers nonsense.

As a journalist, you should always always be asking what the agenda of the speaker is.

Otherwise you are just a propaganda agent.

5 July 2018

...but not inacurate.

"How does £5bn of R&D investment result in £2bn of income tax?"

Read again.  It doesn't.  The invenstment and the income tax comments are separate clauses, but mixed up.

Further, it is not £2bn in "employee" income tax, it's c.£2bn tax that JLR pays to HM Treasury per annum.

If Autocar are going to write on such a fractious topic they really need to be doing so well.  Not slapdash.

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