business

Toyota plans to build new Auris in UK on assumption of Brexit transition deal

7 Comments
By Costas Pitas

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What happened to all the Brexit doomsday predictions?

-1 ( +2 / -3 )

@Burning Bush - they're still talking about it. Perhaps a delaying tactic - waiting to see if Europe will survive the Catalonia independence move. They may even, be hoping that Europe implodes upon itself, making the problem suddenly go away. I guess we will find out the day before the deadline.

1 ( +2 / -1 )

Since the Brexit vote on June 23, 2016, the pound has depreciated over 10% relative to the Euro. So even with a 10% import tax to Europe, the current exchange rate dictates Toyota should continue manufacturing in the UK.

Conversely, if Europe unity were to "implode", the Euro would drop dramatically relative to the pound and Toyota might have to rethink manufacturing in the UK.

IMHO - The reason the pound dropped relative to the Euro after the Brexit vote is because of the prospect of London's status as the financial center of Europe. While finance is certainly an essential core element of healthy capitalist society, there are diminishing - and even negative - returns as it grows to a larger and larger part of the GNP. (In the US the figures for finance as a % of GNP are hovering around 9% - levels not seen since 1929. During the US (economic growth) golden years from 1950 to 1980, the % of GNP stayed steadily below 4%.)

There is not really anything in the Brexit platform about aiming for a healthy balancing of finance and production of tangible goods. So the drop in the pound and Toyota's decision is really just an accidental side effect.

0 ( +0 / -0 )

What happened to all the Brexit doomsday predictions? "on assumption" are the key words, if the Brexit deal doesnt go as planned for the UK how long do you think Toyota will continue to manufacture the Auris 

in the UK. Breeders seem to forget that the UK needs all 28 EU member nations to agree on any future deal, many have already stated that they wont agree to 0% tariffs on UK exports if the UK doesnt agree to the continues rights of EU citizens in the UK and the free movement of people. If I was to bet money it wouldn't be on a favorable UK outcome. The EU is just watering at the mouth at all those manufacturing jobs they can relocate to the EU from the UK and companies will invest where it most advantageous.

-1 ( +0 / -1 )

So even with a 10% import tax to Europe, the current exchange rate dictates Toyota should continue manufacturing in the UK. the prediction was that UK exports would boom with a decline in the pound but data shows that it has only been a moderate improvement. While the pound has dropped against many other currencies it also means material import cost have risen making manufacturing cost rise also. I export goods to the UK and after the pound crashed the prices of those goods in the UK stayed about the same. so my prices wernt much different to purchasing these same goods in the UK. This only lasted about 3 months , after similar wholesalers in the UK ran out of stock and had to import more at the now lower exchange rate making a spike in wholesale prices in the UK.

0 ( +0 / -0 )

@wtfjapan - If the price of Chinese steel is going to be taxed 10% just once, whether it is entering the EU via UK or directly from China, it doesn't really seem the cost of steel in Pounds is going to affect UK car exports to Europe.

If you are exporting finished goods to the UK from a cheaper labor location, then yes the falling pound reduces your relative advantage.

Modest gains in manufacturing profit and employment compound over time. But they can rarely compete with the best bull markets, so manufacturing is often neglected. But when the market goes really bear, then everybody suffers, regardless.

1 ( +1 / -0 )

Neither the ECB nor the BOE have stepped in to support sterling. Allowing a fall in weighed value close to 15% since the 23 June 2016 referendum.

For exporters it has been a windfall. A company say, developing Quantitative Risk Assessment System (iQRAS) solutions can set export price index formula, attaining profit forecast margin rise close to 18/22%. How long this advantage remains is questionable.

It is surreal. I understand that Theresa May is about to announce a series of white papers dealing with a post exit economic remodelling, primary focus on customs a trade regulation.

Weather this is another negotiating tactic remains to be seen. But it is indicative of UK preparing for a no deal scenario.

There is another much more troubling issue, over the counter derivative contracts through central counterparty clearance. Some £14 trillion existing contracts legal a stature is questionable after UK exit. These cross-border trades underpin all 28 member states banks, well nobody really wants to go there.

The situation exists that under current conditions, risk could be left unhedged.

0 ( +0 / -0 )

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