Toyota has pledged to increase its investment in the UK, despite concerns among Japanese businesses about the implications of Brexit.
The announcement follows a meeting between Toyota’s European president, Johan van Zyl, and Prime Minister Theresa May at Downing Street.
Toyota will build the next-generation Auris hatchback at its Derbyshire plant. Engines for the model will be made in Wales and the company said the latest announcement will help to secure 3,000 jobs across the two UK sites.
Nissan and Honda have also agreed to build new models in Britain.
Mr van Zyl said: “Toyota has been here for 25 years. We are a long-term investor.” However, he warned that will keep its approach towards the UK under review, post Brexit: “If the environment – not just for the UK but in general – is not conducive for doing business, we will not invest.”
Downing Street talks
His comments echoed those of the Japanese ambassador to London, Koji Tsuruoka, who led a delegation of Japanese companies to Downing Street last month.
Mr Tsuruoka said: “If there is no profitability of continuing operations in the UK, no private company, not only Japanese, can continue operations. It is as simple as that.”
Nissan, Toyota and Honda use Britain as a manufacturing base and export to Europe. In addition, a number of Japanese-owned firms operate in the automotive supply chain.
Prime Minister May has suggested that car manufacturers should receive special treatment from the EU.
She also wants special arrangements for the financial sector, which includes many foreign banks based in the City of London, such as Nomura, Mizuho and Mitsubishi-UFJ.
However, European negotiators are cool towards the proposals.
At a meeting I attended this week, Britain’s ambassador to Japan Paul Madden said: “It’s well known that the Japanese government and companies were caught by surprise by the Brexit, as were many other people. They are concerned about tariffs and customs issues, regulatory issues and continued access to the workforce that they need. But my impression is that the atmosphere is calmer now than it was after the referendum, as individual companies work through their contingency plans during the inevitable uncertainty of the negotiation process.”
Despite the uncertainty posed by Brexit, the continued investment by Toyota, Nissan and Honda shows that Japanese companies are not departing the UK – and this is true for many sectors.
Firms which do not depend heavily upon cross-border trade between Britain and the EU see scope for business expansion.
Britain’s domestic market is receptive to Japanese goods and services and its economy has not slumped into a post-Brexit recession, as many economists claimed it would, even though the pound has fallen sharply.
Ambassador Madden said: “We are a large rich, sophisticated economy, with low corporate taxation and a business-friendly environment. We have a world class R&D base and some of the best universities in the world. Also, the City of London is a world class financial hub, with a world class talent pool, which we do not see changing.”