On Tuesday, Toyota (NYSE: TM) announced that their UK production might be shifted elsewhere due to the uncertainties over the direction and timetable of Brexit negotiations. There has been a talk of transition periods which has doubted early government assurances that free trade with the European Union would survive Britain’s departure. The government was certain that deals would be negotiated without any trade tax but has now lead to waiting about 2 or 3 more years. Not enough progress has been made to even begin discussing on a free trade deal due to complications talks over the size of the settlement that London has to pay.
Toyota has plans to begin upgrading their Burnaston plant in central England in March to prepare for future models that will cost 240 million pounds ($318 million). The company’s top foreign executive says that Toyota cannot wait indefinitely before deciding on whether or not to build a new model at the site after production of their Avensis model ends. There already is a good amount of upgrade funds that are already spent but there will even larger sums that would be needed to launch production of any new vehicles. The plant’s output will probably start to decline before a decision is to be made but the longer Toyota has to wait, the more potential there is to move to another plant. The company is aiming to not postpone production of a new vehicle for 3 more years due to the Brexit negotiation.