U.K. Carmakers Offer Brexit Praise But Aren’t Making Promises

(Bloomberg) -- Nissan Motor Co. raved that the recently reached Brexit trade accord could “redefine” the U.K. car industry. Vauxhall owner Stellantis NV expressed relief and congratulated those who brokered the deal.

But when two of the top car producers in the country were asked this week whether they’re now ready to invest, their executives gave decidedly non-committal answers.

A Nissan supplier will give Britain an incremental boost by localizing production of a longer-range battery for the Leaf electric hatchback later this year. Chief Operating Officer Ashwani Gupta declined to make any promises beyond that, saying the Japanese company will keep evaluating whether its product lineup and business plans are aligned with demand and invest in the U.K. as long as business conditions are consistent.

Stellantis CEO Carlos Tavares said Tuesday that while good sense had prevailed with regard to Brexit, Prime Minister Boris Johnson’s move to ban gasoline and diesel cars from 2030 could be problematic. The company just formed from the merger of PSA Group and Fiat Chrysler will make the simple decision to stop investing in combustion-engine cars for the U.K. The more complicated choice it’s weighing is whether to now spend on manufacturing electrified vehicles in the country.

“You put your investment close to the market where you sell the highest volume,” Tavares told reporters. Given that, he asked rhetorically: “What is left for the U.K.?”

“If you change brutally the rules and if you restrict the rules for business, then there is, at one point in time, a problem,” Tavares said.

The comments underscore the lingering caution within the auto industry about a trade agreement that saved companies from catastrophe but still complicates their long-term planning. Though immediate tariffs were largely avoided, the accord will force manufacturers to source more of the content going into their cars and battery packs from the U.K. or European Union just three years from now.

Read more: Brexit exposes U.K. car sector’s lack of EV batteries

Gupta told reporters Thursday that Brexit would make Nissan’s massive factory in Sunderland, England, more competitive, with the automaker benefiting from a localized supply chain. He said that the manufacturer is getting subsidies from the U.K. government that other companies have access to and declined to offer specifics.

Tavares suggested Stellantis will decide in the coming weeks whether to invest in two plants making compact cars and commercial vans based in part on how much state support is offered.

“If you look at it from a pure logistic perspective or from a paperwork perspective, perhaps it’s better to put it in continental Europe,” he said. “It depends also on the U.K. government’s willingness to protect some kind of automotive industry in its own country.”

Nissan builds the Juke and Qashqai compact sport utility vehicles in the U.K., in addition to the Leaf. The company recently decided against making an electric model at its northern England factory and scrapped plans two years ago to build another SUV at the same site.

Nissan said its only car that doesn’t qualify for tariff-free trade because of local-content requirements is the longer-range Leaf, which will be addressed by its supplier’s shift.

“If we were competing with a competitor who’s got the same business conditions and now, because of Brexit, the business conditions of the competitor is changing, obviously we get the competitive advantage,” Gupta said. “We will definitely have the competitive advantage on electrified vehicles.”