Honda has warned a no-deal Brexit would cost it tens of millions of pounds in additional tariffs and would damage its competitiveness, but the Japanese carmaker said it was committed to its factory in Swindon.
Ian Howells, the European boss of Honda, said its costs could rise by about 10% if the UK fails to strike a deal with the EU and World Trade Organisation (WTO) tariffs are applied instead.
Honda employs about 3,500 people at its plant in Swindon, where the Honda Civic and the CR-V are built. It keeps only an hour’s-worth of parts and relies on deliveries from about 350 trucks every day to provide the parts required to make the cars on a “just in time” basis.
Howells said that as well as meaning higher tariffs, a no-deal Brexit would cost Honda in terms of additional bureaucracy and damage productivity.
“From an administrative point of view, we’d probably be looking at 60,000-odd additional bits of documentation we’d have to provide to get product to and from Europe,” he told BBC Radio 5 Live.
“If we end up with WTO tariffs, we’d have something like 10% of costs in addition on products shipped back into Europe and that would certainly run into tens of millions. And likewise, when we’re looking at components coming the other way, again tens of millions in tariffs potentially coming into the UK.
“That impacts our productivity, certainly in terms of the flow of product, but also it does hit potentially our competitiveness. Of course if we are shipping and competing against a European manufacturer in Europe, they’re not incurring those tariffs.”
Howells added that despite the potentially negative impact a no-deal Brexit would have on Honda’s UK operations, its Japanese owners have no plans to move production away from Swindon.
“The UK forms part of our global network of manufacturing plants, so the only place we produce the vehicle we produce at Swindon is in Swindon itself. The logistics of moving a factory the size of Swindon would be huge and as far as we’re concerned, we’re right behind supporting continued production at Swindon,” he said.
The warning from Honda on the challenges posed by the prospect of a no-deal Brexit comes a day after Jaguar Land Rover – the largest manufacturer of cars in the UK – announced that about 2,000 staff will move to a three-day week at its Castle Bromwich plant.
The company said it had taken the decision to reduce production at the West Midlands site as it grapples with difficult conditions in the car industry, caused by Brexit and the slump in sales of diesel-powered cars.
Last week, Jaguar Land Rover warned “tens of thousands” of jobs could be lost in the sector if the government failed to reach an agreement with Brussels.
The UK automotive industry has repeatedly called on Theresa May’s government to prioritise the sector in its negotiations with the EU, arguing that car manufacturing in Britain risks “death by a thousand cuts” if multinationals choose to invest in countries other than the UK after Brexit.
The average UK-built car has about 6,000 parts and the majority come from the EU. Parts can sometimes pass through four countries before reaching the UK.
