Toyota says hard Brexit would temporarily halt UK factory

[MUNICH] Toyota Motor Corp. would need to temporarily halt UK production in the event of a so-called hard Brexit, according to the head of the automaker's European operations.

If the UK crashes out of the European Union without a trade agreement with the rest of the bloc, it would cause a logistics disruption that would force a stoppage, Toyota Europe President Johan van Zyl told reporters at the Paris Motor Show on Monday. 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 Brexit. 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 UK is slated to leave the EU.

Toyota's plant in Burnaston, England, is the only one making the Auris hatchback and wagon for the European market, and about 87 per cent 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.

Van Zyl said it is difficult to estimate how long a production halt would last. 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 UK from the EU each day, he said. Holding more parts to offset logistics delays would increase costs, he said.

Brexit talks have stalled on the question of how to avoid the need for police and customs checks on the border between the UK and Ireland. The U.K. is preparing a new proposal that would back down on its opposition to new checks on goods moving between the British mainland and Northern Ireland, in exchange for allowing all of the U.K. to remain in the EU's customs regime.

BLOOMBERG