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Brexit to have negative effect on automakers

Brexit to have negative effect on automakers
Nikhil Puthran Nikhil Puthran Saturday 25 June 2016, 08:25 AM

Most of the voters have voted in favour of Brexit – British exit from the European Union. In the coming months, British and European leaders will be negotiating the terms of Britain’s departure. The move may have an adverse effect on the automakers and they will be more cautious with their investment decisions involving a new product or redesigning a vehicle model in the UK.

Tata Motors owned Britain’s largest carmaker Jaguar Land Rover (JLR) has been in Britain for three decades and makes 4, 75,000 cars a year in the country of which most of them are exported inside the European Union and beyond. JLR estimates that their annual profit could be cut by one billion pounds ($1.47 billion) by 2020. Raising concerns, Nissan and BMW have also stated that the Brexit will have an effect on their car exports to the European Union which is a destination for more than half of their cars which are produced in Britain.

Until now, exports from Britain to the European Union are free of tariffs and duties. But owing to Brexit, Toyota has stated that duties under the new trading deals can cost an addition of 10 per cent, thereby hitting either prices or margins, and denting their sales numbers. Toyota has produced about 1,90,000 cars in Britain last year. Of that, 75 per cent went to the European Union. Of which only 10 per cent was shipped and sold within Britain.

 

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