Nissan said a post-Brexit tariff on imports would be a "disaster" for the company © Nissan
Nissan said a post-Brexit tariff on imports would be a "disaster" for the company © Nissan

Nissan seeks £100m Brexit supply chain fund

2 March 2017

Nissan has called on the UK government to invest millions in attracting car part manufacturers or risk a “house of cards” collapse in the industry post-Brexit.

Colin Lawther, Nissan’s head of European manufacturing, told MPs on the International Trade Committee the industry had made a “strong request” for a supply chain investment of between £100m and £140m, according to the Guardian

“This is critical—if we don’t really invest in the supply base, it will be a house of cards effect,” he said.

“Nissan will not succeed in the future, with or without Brexit, unless the government does something to help us in the supply chain.”

Nissan’s northeastern site is Britain’s largest plant and the fifth most efficient car facility in the world, producing two vehicles a minute and using around 5m parts everyday.

According to the Financial Times, Britain’s car plants are heavily dependent on overseas suppliers for their parts, with almost 60% of parts in UK-assembled vehicles imported, which leave sites vulnerable to fluctuations in exchange rates and potential tariffs after Britain leaves the EU.

In his evidence Lawther added the current UK supply base was not globally competitive, making it more attractive for companies to purchase parts from overseas, with Nissan sourcing 85% of its car parts from outside Britain.

Post-Brexit, the overseas content of Nissan cars would have to be reduced by about half to be considered British under World Trade Organisation (WTO) rules of origin.

During her Lancaster House speech, setting out her goals for Brexit last month, prime minister Theresa May ruled out full membership of EU customs union and heightened speculation the UK would have to fall back on WTO rules by declaring “no deal is better than a bad deal”.

Lawther warned the imposition of a potential 10% WTO tariff on imports and exports would be a “disaster” for Nissan and would cost the company up to £500m a year.

“When you look at the supply base, not all of it is in place and that is where we are asking the government to help us,” he said. 

“We should put a £100m fund together quickly to repower the supply base to make us competitive and give flexibility, so that in the end under any circumstances we are in charge of our own destiny.”

According to Nissan, many of their high-tech car parts come from Japan, including parking cameras, electronic controls and brake control units, with others coming from China and the eurozone. 

Last year, the government persuaded Nissan build new models at its Sunderland plant despite the uncertainty surrounding Brexit.

Mr Lawther said the government “gave assurances that we would have competitive trading environment at the end of the process”.

He added the decision to expand in Sunderland was based on a set of conditions at that point in time and the firm would constantly examine its decision to stay. 

“As those circumstances change, and we wouldn’t wait until the end of the process, we will continually review the decision that we take, based on anything that materially changes.”

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