Abu Dhabi, UAEThursday 22 August 2019

Jaguar shuts plants and James Bond's car maker laments Brexit

Jaguar Land Rover (JLR) closes UK plants on Monday for five days adding to at least half the country's car production being off-line

Britain's largest car maker Jaguar Land Rover is shutting down plants for a week from today. Getty
Britain's largest car maker Jaguar Land Rover is shutting down plants for a week from today. Getty

Days after the maker of James Bond's favourite car expressed his exasperation at the chaos Brexit is causing to his firm and the wider the UK motor industry, Jaguar Land Rover (JLR) shut its UK plants on Monday for five days over Brexit, adding to other shutdowns to leave at least half the country's car production off-line in what could be a pivotal week for Britain's divorce from the EU, according to Reuters.

The move by Britain's biggest car maker, to prepare for any disruption resulting from Brexit, was taken a few months ago at a time when the departure date - since extended to April 12 - was March 29.

Last week Aston Martin chief executive Andy Palmer revealed he was shaken but not stirred by Brexit as he lamented that Britain's departure from the EU would be "unwelcome".

"All of this is unwelcome. We are absolutely behind the principles of free trade all over the world.

"But in terms of: are we ready for a no-deal Brexit? I think we are as ready as one can be.

"We are less exposed but equally p****d off," he told a conference hosted by the Society of Motor Manufacturers and Traders (SMMT).

The UK industry organisation has long argued that a no-deal Brexit would ramp up costs and damage supply chains - while tariffs would undermine competitiveness and bite into profits, according to AFP.

Mr Palmer admitted on Thursday that Aston Martin - whose cars play a starring role in the fictional British spy 007's blockbuster films - was able to pass on rising costs more easily than most competitors.

(FILES) In this file photo taken on October 3, 2018 Andy Palmer, CEO of Luxury British sports car manufacturer Aston Martin poses by models of Aston Martin cars as the company is floated on the London Stock Exchange in London. The boss of James Bond's favourite carmaker Aston Martin on Thursday, April 4, said he was "pissed off" at the prospect of a no-deal Brexit. / AFP / Tolga AKMEN
Andy Palmer, CEO of Aston Martin with an early James Bond ride. AFP

"From a pricing point of view, we have more elasticity around pricing because it is a luxury good," said Mr Palmer.

"So, if tariffs come in place, you could argue that we have a greater ability to pass that on to the customer.

"You also have to note that because we trade and manufacture in pounds, if there is a hard Brexit then the pound will collapse - our cars get cheaper and basically we can compensate for the tariffs.

"On the other hand, Ferrari, Lamborghini, etc, are importing into the UK - which is our second biggest market after the US - and they are less competitive than [car makers in] the UK."

But he continued: "The bigger deal is around importation of parts. A substantial part of that comes from the European Union.

"You can't make cars on a just-in-time basis if you haven't any bits - and getting your bits through Dover/Calais, particularly at the start of a no-deal Brexit, is of concern."

Mr Palmer noted that the group has already launched its contingency plans for a hard Brexit.

"We think we have done everything that we can to preserve those supply chains," he said. "We've increased stock. We've changed our supply channels. We are already getting parts through different ports.

He added: "We have now increased our UK content beyond 55 per cent."

New registrations for all cars sank 3.4 per cent in March year-on-year to just over 458,000 vehicles, the SMMT data revealed.

Automotive firms face a number of possible risks under a disorderly Brexit, including delays to the supply of ports and finished models, new customs bureaucracy, the need to recertify models and an up to 10 per cent tariff on finished vehicles.

Prime Minister Theresa May's efforts to obtain a longer extension have also ruined contingency plans for some of them.

Shutdowns are generally organised far in advance so employee holidays can be scheduled and suppliers can adjust volumes, making them hard to move.

With Britain's political leaders still deadlocked over Brexit and some EU states questioning a further departure delay, culture minister Jeremy Wright said Mrs May would continue talks with the opposition Labour Party to try to find a compromise solution.

BMW's UK Mini and Rolls-Royce plants are also shut this week, as is Peugeot's Vauxhall factory, which brought forward summer shutdowns to April.

Together JLR, Mini, Rolls-Royce and Peugeot's Vauxhall brand, which is branded as Opel on the continent, built over 750,000 of Britain's 1.52 million cars last year.

Honda has also scheduled six "non-production days" in April but has declined to say on which dates they will take place.

Britain's once buoyant car sector has since 2017 posted sharp falls in sales, output and investment.

JLR has already had to cut output last year as it faces declining sales, partly as customers shun diesel vehicles.

Overwhelmingly foreign-owned, the Britain-based car industry has become increasingly frustrated as a stable and attractive investment environment becomes mired in a deep political crises, risking free and frictionless trade.

At least 25 per cent of Britain's automotive engine capacity is also closed as BMW's central English Hams Hall factory continues a four-week shutdown while JLR's Wolverhampton site stops production for the week as part of Brexit preparations.

Honda engine production will also stop on six days this month.

Updated: April 8, 2019 02:52 PM