Honda: No-deal Brexit ‘would cost millions’

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Image caption Honda employs about 3,400 people at its Swindon plant

The senior vice president of Honda Europe has warned that a no-deal Brexit would cost his company tens of millions of pounds.

Ian Howells told the BBC that quitting the bloc without an agreement would affect the carmaker’s competitiveness in Europe.

He said the Japanese firm was preparing for a no-deal outcome but had not discussed relocating its Swindon plant.

The firm builds its Civic model in Britain for the global market.

In an interview with Radio 5 live, Mr Howells said a no-deal Brexit would lead to costly trade barriers and disrupt its supply chain.

“In terms of administration, we’d probably be looking at something like sixty odd thousand additional bits of documentation we would have to provide to get product to and from Europe,” he told the Wake up to Money programme.

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Image caption Honda builds the Civic in the UK

“And clearly if we end up with World Trade Organization tariffs we’d have something like 10% costs in addition on our shipped product back into Europe, and that would certainly run into tens of millions of pounds.”

“Likewise when we’re looking at componentry coming the other way, again [it could cost] tens of millions in terms of tariffs coming into the UK.”

Supply chain risks

Like other carmakers in Britian, Honda only stores about an hour’s worth of components at its Swindon plant to keep costs down.

Instead it relies on about 350 truckloads of parts that are delivered from the continent each day.

Mr Howells said the loss of “frictionless trade” in this supply chain would harm its production output and competitiveness.

“If we are shipping and competing against a European manufacturer in Europe, they are not incurring those tariffs,” he said.

“And in the UK it would be the componentry cost that would be the main additional burden we would have to carry for UK customers.”

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Image caption EU customers buy about €15bn worth of British-made cars per year

A host of carmakers in Britain, including Nissan and Jaguar, have warned a bad or no Brexit deal would be damaging for the UK car industry.

EU customers buy about €15bn ($18.5bn; £13bn) worth of British-made cars per year, accounting for 53% of the UK’s vehicle exports.

However, despite uncertainty over a future trade deal, carmakers such as Nissan, BMW and Toyota have committed to expanding production in Britain since the Brexit vote.

Mr Howells told the BBC that Honda was preparing for a potential no-deal outcome by carrying “a little bit more componentry than we otherwise would” and by reviewing its production schedules.

However, he added the Swindon plant manufactured for the global market, not just Europe, and that there had been no discussions about moving it.

He also said the firm supported the Prime Minister’s Chequer’s deal, which proposes following a “common rule book” with the EU for trade in goods.

Critics say the deal would make Britain a rule taker, not a rule maker, and hamper its ability to strike trade deals around the world.

But Mr Howells said common rules for building and approving vehicles across Europe would be a “positive” for the car industry.

Read more: https://www.bbc.co.uk/news/business-45558424

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