Honda “cannot afford” the 10 per cent tariff that would be imposed on exports if Britain uses World Trade Organisation rules after Brexit.
The firm made the claim in a submission to parliament’s business committee about how it foresees Brexit affecting its profits. Citing its experience in the Israeli market, it says “a 10 per cent tariff would make our vehicles uncompetitive, and would impose costs we cannot afford to absorb”.
A spokesman for Honda UK reiterated to the Press Association that this simply means the tariff “would affect our competitiveness”.
In the document, the Japanese car manufacturer also warned that if no deal is reached with Turkey – where Honda has a factory and trades tariff-free through the Customs Union – the use of WTO tariffs would see it faced with a £7 million duty fee.
A statement from Honda Motor Europe said: “Honda remains committed over the long-term to its sales and manufacturing activities in the UK and Europe, and we are working closely with UK and EU government to ensure the Brexit process delivers the conditions needed to support the long-term competitiveness of not only our business, but businesses throughout the UK auto sector.”
It highlighted that Brexit needs to deliver zero tariffs to avoid cost increases, “friction-free customs procedures” to minimise impact on production lines and remove potential administrative burden, and clear regulation that “avoids regulatory divergence between the EU and the UK”.
Honda, which has its European headquarters in Bracknell and a major manufacturing plant in Swindon, currently employs 4,500 people in the UK, and warned that it needs to be able to easily move people across its different European departments.
It also raised concerns that removing EU nationals from its UK factory workforce without a sufficient transition period “would result in staffing shortages with a potential impact on manufacturing activity”.