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Brexit uncertainty puts brake on car sales as Toyota warns of 'fog' around UK's future

Brexit uncertainty is hitting car sales in the UK and dragging down the industry’s performance across Europe, new data from analysts JATO show.
Registrations of new cars in September in Europe totalled 1.46m, down 2.2pc on the same month a year ago, ending what JATO called an “unprecedented” strong run.
However, the analysts said the UK continued to splutter, suffering a much bigger decline, down 9.3pc to 426,170.
On a year to date basis, new car sales in Europe were 2.3pc higher at 8.7m, but the UK was 3.9pc lower at 2.06m.
“As anticipated, European registrations are starting to slow down following their unprecedented run of strong results,” said Felipe Munoz, JATO global automotive analyst. “A drop after such high levels of growth is not unusual, but it is clear that the recent performance of the UK car market - one of Europe's most significant - is having a substantial impact on the European car market as a whole.
Brexit uncertainty puts brake on car sales as Toyota warns of 'fog' around UK's future

UK-built cars awaiting export from Toyota's Derbyshire plant

Credit:
Reuters
“Until there is more certainty around Brexit negotiations, and the UK's future in Europe as whole, this is set to continue.”
The findings came as Toyota’s European chairman said warned a “fog” around negotiations over Britain leaving the EU was hampering the car giant’s plans for its UK operations.
Speaking at the Tokyo motor show, Didier Leroy said that with the vast majority of production at Toyota’s plant in Burnaston, Derbyshire being exported, any trade levies could hit its competitiveness. The factory employs 2,400 staff.
“Today they export 80pc to 85pc of production to continental Europe, so if we move to something like an import tax, trade tax or any kind of additional penalty, it will create a big negative impact in terms of competitiveness for this plant,” Mr Leroy said.
Brexit uncertainty puts brake on car sales as Toyota warns of 'fog' around UK's future

Toyota European chief Didier Leroy sets out the company's thoughts about Europe at the Tokyo motor show

Credit:
Reuters
“The UK Government should also understand that we cannot stay in this kind of fog when we don’t know what will be the output of the negotiation. And as quick as we can get clarity on that, better will be the way we can prepare for the future."
Toyota’s Burnaston site makes the Avensis and Auris, with about 180,000 vehicles rolling off the lines there a year. The company also has an engine plant in Flintshire, north Wales, which has about 600 staff, who last year produced 282,000 engines.
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In March Toyota said it was investing almost ?250m into Burnaston but concerns are growing over the plant’s future without more clarity about how Brexit will shape up.
From the decision to go ahead with a new vehicle to the first one being produced is generally a seven-year cycle as choices are made over factories and the supply chain.
The current version of the Avensis is approaching the end of its lifecycle and where to build the next model is expected to be the next major decision affecting the UK car industry.
Without certainty over Brexit, the new car could be built abroad if trade tariffs add to the cost of UK production.
The warnings came as official industry data showed that the number of vehicles produced at car plants in Britain fell again in September, dropping 4.1pc on the same month a year ago to 153,224.
Output for export eased 1.1pc in the month to 153,224, a level the Society of Motor Manufacturers and Traders described as “in line with slower growth across EU markets”.
However, vehicles being built for a life on British roads suffered a much steeper decline, with output dropping 14.2pc to 31,421.
Mike Hawes, chief executive of the SMMT, said: “With UK car manufacturing falling for a fifth month this year, it’s clear that declining consumer and business confidence is affecting domestic demand and hence production volumes.
“Brexit is the greatest challenge of our times and yet we still don’t have any clarity on what our future relationship with our biggest trading partner will look like, nor detail of the transitional deal being sought. Leaving the EU with no deal would be the worst outcome for our sector so we urge Government to deliver on its commitments and safeguard the competitiveness of the industry.”
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