Jaguar Expects Border Chaos With or Without a Brexit Trade Deal

(Bloomberg) -- Jaguar Land Rover Plc is resigned to the U.K.’s breakup with the European Union resulting in a messy and complicated transition period for its operations regardless of how government trade-deal negotiations shake out.

The luxury-car maker released the details of its Brexit battle planning Tuesday within its report of a small quarterly pretax profit, though its parent’s loss worsened from a year ago. The company formed a steering committee that is staying apprised of government efforts to secure an agreement that avoids tariffs while also planning with partners for a no-deal scenario.

Whether or not Britain and the EU reach an agreement to avoid 10% tariffs on vehicles and roughly 4% average levies on parts, Jaguar Land Rover sees increased customs declarations being an administrative and compliance burden. The Tata Motors Ltd.-owned company also warned of potential delays moving cars and components across borders that could disrupt its supply chain and exports of finished vehicles.

The automaker expects the pound to weaken and significantly offset tariff costs if there’s a so-called hard Brexit. It would try to mitigate the impact of that scenario by adjusting its pricing and model mix. And the company sees its U.K. sales benefiting from tariffs making its competitors’ imports more expensive.

Jaguar Land Rover is working with its suppliers to ensure they’re ready for changes to customs processes and developing contingency plans, it said in an emailed response to questions, without elaborating. Regardless of whether there’s a trade deal, the carmaker said it has a contingency supply of one days’ worth of components for production and two weeks for aftermarket parts.

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