Jaguar Land Rover warns 'bad Brexit' could put its U.K. future in doubt

The U.K's two-year-old referendum that resulted in the historic decision to leave the European Union is continuing to trouble automakers with operations in the country, and the last 24 months have hardly produced less uncertainty over what it means for their businesses. Quite the opposite, the financial futures of those automakers with significant assembly operations in the U.K. remain murky, as top U.K. politicians have been unable to provide clarity on the U.K.'s future status as it leaves the single market and the EU customs union.






Two years after the deciding vote big industrial manufacturers are still not sure if they'll have unrestricted access to the EU market, or what it could cost them.

Jaguar Land Rover CEO Ralf Speth came out this week with thinly disguised statements of intent regarding the post-Brexit economic landscape and JLR's overall future in the U.K., days ahead of a crucial meeting between U.K. cabinet ministers and Prime Minister Theresa May over the details and costs of the U.K.'s withdrawal from the EU trade network.

"Jaguar Land Rover’s heart and soul is in the UK," Speth said in a statement. "However we, and our partners in the supply chain, face an unpredictable future if the Brexit negotiations do not maintain free and frictionless trade with the EU and unrestricted access to the single market."

"We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees."

More ominously, Speth indicated that an unfavorable scenario for the automaker, one which would see costly or radical changes to the tariff and customs-free access to the European Union, disrupting "just-in-time" manufacturing processes, could result in the automaker shifting its operations elsewhere.

"A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year," Speth said. "As a result, we would have to drastically adjust our spending profile; we have spent around £50bn in the UK in the past five years – with plans for a further £80bn more in the next five. This would be in jeopardy should we be faced with the wrong outcome."

The implication is that JLR could be forced to move its assembly out of the U.K., likely to the EU for the unrestricted customs-free single market to avoid manufacturing headaches and costs.

Jaguar Land Rover is not alone among automakers who could transfer their assembly operations elsewhere; BMW warned last month that it could be forced to shutter its U.K. production facilities if it could not continue importing components from the EU. Such a move could see significant changes to Mini and Rolls-Royce production, which rely heavily on components made in the EU; the implication is that both brand's U.K. assembly operations could be moved to Germany, with thousands of U.K. jobs on the line.