Nissan Motor Co. Ltd.'s European operations could be in "jeopardy" if Britain leaves the European Union later this month without a prenegotiated deal, the Financial Times reported Oct. 10, citing comments by the Japanese carmaker's European chairman.
The maker of the electric Leaf and fast-selling Qashqai SUV ships more than two-thirds of the cars produced at its Sunderland plant in northern England to Europe, but they would become subject to export tariffs should the United Kingdom leave the 28-member bloc as scheduled on Oct. 31 without trade arrangements in place beforehand, potentially rendering those sales unviable.
"Our industry works with low margins," Nissan European Chairman Gianluca de Ficchy said, according to the Financial Times. "If we're in a situation where we have to apply 10% export duties to 70% of production, the entire business model of Nissan Europe will be in jeopardy."
U.K. carmakers, through the Society of Motor Manufacturers and Traders, which represents them collectively, have repeatedly sought assurances from the government that it would not leave the European Union without a negotiated deal, saying it would be a "devastating" blow to the industry.
Nissan has now become the first automaker to voice doubts about the continuance of its operations, which began in the U.K. in 1986, under a no-deal scenario.
De Ficchy cautioned that it was "not possible" to tell whether it would eventually be forced to close the Sunderland site without more clarity over the U.K.'s future trading relations with the EU, the FT reported. The company has drawn up 20 potential scenarios to determine how its business could be impacted.
Among the unknowns that would influence that decision are the possible granting of relief on 3% import duties on European-made components and the scope for selling more cars in the U.K. at a lower price to offset a hit to sales in EU nations as well as euro-sterling currency fluctuations, de Ficchy told the FT.
"We need to preserve that plant," de Ficchy reportedly said, describing the 6,000-worker Sunderland site which recently received £100 million in new investment, as "one of the best we have."
Nissan had been told by the government that it could take years for it to set up systems to determine which components in its exported cars were EU-sourced and eligible for a tariff waiver, raising doubts over whether the carmaker could eventually recoup the duties paid in the interim, the FT reported.
Nissan's other European operations consist of light commercial vehicle production in Spain and the assembly of the Nissan Micra in France by Renault SA, its partner in a long-standing procurement and technology-sharing alliance.
Nissan did not immediately respond to a request for additional comment from S&P Global Market Intelligence.
