Toyota Sees Hard Brexit Disrupting $78 Million in Weekly Revenue

(Bloomberg) -- A so-called hard Brexit risks disrupting the weekly revenue of about 60 million pounds ($78 million) that Toyota Motor Corp. generates from its England plant, according to the head of the automaker’s European operations.

“We make 600 cars a day in the U.K., five days a week,” Toyota Europe President Johan van Zyl said in an interview at the Paris Motor Show on Tuesday. “At around 20,000 pounds revenue per car, you can work it out. If you disrupt that, it’s very concerning."

The U.K. crashing out of the European Union without a trade agreement with the rest of the bloc would cause a logistics interruption forcing a temporary stoppage at Toyota’s plant in Burnaston, England, van Zyl told reporters Monday, saying it’s difficult to estimate how long it would last. Toyota wants tariff-free trading after Brexit, he said.

The world’s most profitable carmaker joins a growing list of companies making contingency plans for a no-deal divorce from Europe. Last month, BMW AG said it will bring forward a four-week stoppage for routine maintenance at its Oxford factory from the summer to April 1, the date the U.K. is slated to leave the EU.

Toyota announced a 240 million pound investment in Burnaston last year. It is the sole factory making the Auris hatchback and wagon for the European market, and about 87 percent of the 144,000 vehicles it made last year were exported to EU customers, according to a company spokesman. Another Toyota facility in Deeside, Wales, makes engines.

“We’re hopeful there’ll be a deal” on Brexit, said van Zyl. “We have a bit of breathing room before the next major investment decision that’ll come within the next three years, but not a lot.”

On Monday, van Zyl said that due to the nature of Toyota’s just-in-time production system, the Burnaston plant only has four hours of parts on hand and must constantly restock those in sequence, with an average of 50 trucks carrying components into the U.K. from the EU each day. Holding more parts to offset logistics delays would increase costs, he said.

While a no-deal Brexit remains front of mind for Toyota, it welcomed progress on a North American trade agreement. Van Zyl said in a separate interview with Bloomberg TV on Tuesday that the deal between the U.S., Mexico and Canada brings stability amid escalating global trade friction.

“We now have to see the details of how it will unfold, but we are very pleased,” he said. “We hope that this agreement paves the way for some other agreements to be reached.”

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