Jaguar Land Rover boss: Brexit threatens £80bn UK investment & will result in factory closures

Jaguar Land Rover

Jaguar Land Rover has warned that a “bad” Brexit deal would threaten £80bn worth of investment plans for the UK and may force it to close factories.

The UK’s biggest carmaker, owned by India’s Tata Motors, said its “heart and soul is in the UK”.

But without frictionless trade JLR said its UK investment plans would be in jeopardy.

The warning came as Downing Street set out details of a possible post-Brexit customs arrangement.

Jaguar Land Rover chief executive Ralf Speth said: “A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year.

“As a result, we would have to drastically adjust our spending profile. We have spent around £50bn in the UK in the past five years – with plans for a further £80bn more in the next five.

“This would be in jeopardy should we be faced with the wrong outcome.”

Mr Speth said the firm urgently needs “greater certainty” to continue to investing heavily in the UK.

He told the Financial Times: “If I’m forced to go out because we don’t have the right deal, then we have to close plants here in the UK and it will be very, very sad. This is hypothetical, and I hope it’s an option we never have to go for.”

Uncertainty over Brexit, as well as the future of diesel cars, has already led the carmaker to announce a series of changes to its UK business.

At the beginning of the year, JLR said it would cut production at its plant in Halewood, Merseyside where it builds three of its Range Rover models.

In April, it decided not to renew the contracts for 1,000 temporary workers in Solihull.

Last month, JLR said it would shift production of the Land Rover Discovery SUV to Slovakia, potentially leading to some UK job losses.

However, the carmaker also said that it was investing in its Solihull site to allow it to build its new Range Rover models, some of which will be electric-powered, from 2020.

PB Balaji, chief financial officer at Tata Motors, said: “Jaguar Land Rover and Tata Motors have always maintained that the uncertainties from Brexit are avoidable and the business seeks clarity to ensure that industry takes timely and right decisions to manage the transition.

“Additionally, Jaguar Land Rover needs free and full access to the single market beyond transition to remain competitive which we also firmly believe is in the best long term interests of the United Kingdom.

“The recent statement from JLR only reaffirms this position that a Brexit which increases bureaucracy, reduces productivity and competitiveness of the UK industry is in no-one’s interest.”

As well as Halewood and Solihull, JLR also has a manufacturing plant in Castle Bromwich, Birmingham where it makes its Jaguar cars.

Last year, it made more than 600,000 cars, 20% of which were sold to mainland Europe, one of its biggest markets.

JLR said that it spent £5.67bn with UK suppliers of production parts during its last financial year, as well as £5.37bn with EU-based businesses.

Business Secretary Greg Clark said the government was “determined” to make sure JLR could “continue to prosper and invest in Britain”.

The Jaguar Land Rover warning follows similar statements from BMW and Airbus. However, Health Secretary Jeremy Hunt has called these warnings “completely inappropriate”.

Meanwhile, the British Retail Consortium (BRC) has warned in a letter to Prime Minister Theresa May and EU chief negotiator Michel Barnier that failure to reach an agreement to ensure frictionless trade will result in customs delays for perishable goods.

The BRC says that a third of the food consumed in the UK is imported from the EU.

Ed Thorne, UKI Managing Director at Dun & Bradstreet: “With the March 2019 deadline fast approaching, it’s no surprise that businesses are becoming impatient with the lack of clarity on what Brexit will mean for them. Several major organisations are already considering moving operations or HQs elsewhere in the EU or beyond, with others downsizing the scale of activities in the UK – and Jaguar land Rover is the latest to express its concerns.

Our recent research has in fact found almost a third of businesses have planned or are planning to reduce UK investment, and almost a quarter have already halted or slowed their plans for expansion in the UK.

“The uncertain environment has led to an increased amount of caution, and even stagnation in the market. Not knowing the full impact of Brexit has made it more difficult to make decisions and develop strategic plans for many businesses. It is a frustrating time and although business leaders are delaying strategic decisions until there is more clarity on the full impact of Brexit, this is not sustainable in the longer-term.”