The Conservative party’s victory in the UK general election means Prime Minister Boris Johnson can now go ahead and withdraw the country from the European Union, impacting automakers building and selling cars in the country.
Before Thursday’s election automakers had urged the British government to make a deal with the EU to safeguard the future of an industry that has been going through a renaissance in recent years as foreign brands invested in local plants.
Johnson’s emphatic win means car companies can plan better for the future and raises their hopes that there might be a “soft” Brexit that keeps close ties between Britain and the EU.
“It brings certainty and that by any measure is a great result,” a top UK automotive executive said, declining to be named.
On Friday, the SMMT auto association said the British government’s priority now must be to restore business and economic confidence and re-establish the UK’s reputation as a great place to invest at a critical time for the industry.
“When automotive succeeds so does Britain. We look to the new government to maintain our global competitiveness, which means delivering a deal with the EU that is ambitious, maintains free and frictionless trade, and drives growth and innovation to meet shared environmental goals,” SMMT CEO Mike Hawes said in a statement.
Automakers have warned that if Britain’s exit from the EU leads to tariffs, UK-built vehicles would be uncompetitive when sold in mainland Europe.
British factories would also be hit if imports of parts from suppliers in mainland Europe are delayed at borders. UK car factories are integrated into supply chains that can stretch around the world and operate just-in-time manufacturing processes, which mean some parts arrive minutes before being fitted onto vehicles rolling off production lines.
Johnson’s victory gives him the power to get his own way on Brexit, especially if he needs extra time to negotiate with the EU. He has said he will start to push legislation through parliament before the end of the year to meet the current departure date of Jan. 31.
However, if Britain wants access to the bloc’s single market, it will have to give up control in some areas, in particular taxation, labor and environmental standards. Hard-liners in the Conservative party are likely to object to that and push for a clean break from the EU at the end of the year. But Johnson’s big majority could allow him to marginalize them and cut a deal that keeps the UK more closely aligned with the EU.
Nissan Europe Chairman Gianluca de Ficchy has said that if a hard Brexit leads to tariffs of 10 percent between the UK and EU, the future of the automaker’s Sunderland factory in northeast England would be in doubt. “If it means the implementation of World Trade Organization tariffs of 10 percent, the overall business equation is not sustainable for us because 70 percent of our vehicles are exported to Europe,” he told Automotive News Europe in a recent interview.
A Nissan spokesperson said on Friday that the company looks forward to meeting with the new government to ensure that the automaker’s Sunderland plant continues as a successful international automotive hub.
Jaguar Land Rover CEO Ralf Speth has said that the” wrong” Brexit deal would cost the UK car industry tens of thousands of jobs. JLR has three car UK plants from which it exports cars worldwide.
Toyota has warned that it may end manufacturing in the UK if the country crashes out of the EU on unfavorable terms. Toyota built just over 8 percent of Britain’s 1.52 million cars last year at its factory in Burnaston, central England.
Here are the next steps for Johnson.