Jaguar Land Rover: Brexit must be fair for all


JLR CEO Ralf Speth speaking at the Paris auto show
JLR CEO Ralf Speth speaking at the Paris auto show

Jaguar Land Rover (JLR) has revealed it is working on an electric car while also saying it may have to “realign its thinking” on investment after Britain’s vote to leave the EU.

Britain is expected to begin formal divorce talks from the European Union by March 2017, it emerged last weekend.

Discussions could last two years, and there are growing concerns among carmakers about the implications of a “hard Brexit”, which would leave firms paying tariffs to export UK-assembled cars to EU markets.

Nissan chief executive Carlos Ghosn said last Thursday (29) that he would halt new investment in Britain without a pledge of compensation for tariffs imposed on UK-built cars in the event of a “hard Brexit”.

Ralf Speth, the chief executive of JLR, Britain’s biggest carmaker, responded to those comments, saying: “We are the only car manufacturer in the UK to do all the work in terms of research, design, engineering, production planning in the UK. We want to have fair treatment and a level-playing field at the end of the day.”

Speth also cautioned that there were signs some customers in Europe, JLR’s biggest market, no longer wanted to buy British cars.

He said JLR, which built one third of Britain’s 1.6 million cars last year, would face a double hit in the event of “hard Brexit” with tariffs on exported cars and imported parts, and technology hurting competitiveness.

“If we face higher tariffs than anybody else, then it’s quite clear that it’s reducing the competitiveness of our products, especially in Europe,” he said. “The order of magnitude cannot be calculated right now.”

Carmakers Nissan and Toyota both warned last week that tariffs could hurt production in Britain. Volkswagen-owned brand Skoda urged Britain, Europe’s second-largest car market, to clarify the situation as soon as possible.

Meanwhile, the pound slid to a three-decade low against the dollar on Monday (3) after prime minister Theresa May set a March deadline for the formal departure process from the European Union to begin, sending British shares to a 16-month high.

May said she would invoke Article 50 no later than the end of next March, referring to the EU’s Lisbon Treaty that formally puts the divorce proceedings between the EU and Britain in place.

This means she kicks off the negotiations process before the French and German elections next year, and implies the two-year Brexit clock triggered under Article 50 will wind down by March 2019, a year before Britain’s next general election.

Chancellor Philip Hammond vowed to protect the economy from any turbulence during the negotiations, assuring businesses and consumers he would act if needed.

Any blow to the British car industry, which was dogged by wild-cat strikes and poor productivity in the 1970s and 1980s, could undo years of progress with output currently expected to reach a record high of two million by 2020.

JLR said its long-term investment strategy has not changed as a result of the referendum vote, but the firm would now have to think again after Britons backed leaving the EU on June 23.

“We have to realign all of our thinking and work on how to handle this Brexit best,” Speth said. Asked if that included investments, he replied: “Everything.”

Speth also raised concern that some European consumers might be shunning British brands in the wake of the Brexit vote, referring to comments by European sales representatives.

“They have the very first customers in their showrooms (who) clearly highlight that they don’t want to buy British products any more,” he said.

Over 800,000 jobs depend on Britain’s overwhelmingly foreign-owned car industry and big carmakers backed continued membership during the campaign, seeing benefits from open trade and standardised rules.

Britain’s car industry body the Society of Motor Manufacturers and Traders warned last Friday (30) that a lack of clarity over a potential deal risked future growth.

Hammond, who campaigned for Britain to remain in the EU before the referendum, said the government would ensure the best possible access to EU markets.

Speth left open the possibility of new investment in Britain such as an electric battery and car plant if the conditions, including pilot testing and support from science, were right. “The best thing would be to have something in the UK. If you are producing batteries there, you will also produce vehicles there,” he said, suggesting a partnership with the Warwick Manufacturing Group in central England. (Reuters)