Why a no-deal Brexit may cost Ford up to $1bn
US carmaker again warns of ‘catastrophic’ impact of a hard exit from the EU
Ford has estimated that it may lose $800m (£615m) this year alone if Britain were to leave the European Union without a deal.
Sources close to the company told Sky News that executives at the American carmaker have “privately calculated” that a hard, no-deal Brexit would have a significant impact on its profits in the first nine months after the divorce - due to take place on 29 March.
While most sources are claiming that Ford stands to lose up to $800m, a company insider told Reuters that the figure could be as high as $1bn (£760m).
The weakening of the pound is being attributed to this potential loss in profits – and the impact of tariffs imposed by the World Trade Organization (WTO).
It’s not known how WTO tariffs would impact Ford, but the BBC says cars and vehicle parts “would be taxed at 10% every time they crossed the UK-EU border”.
With six manufacturing plants in the UK, along with several others scattered across France, Germany, Romania, Slovakia and Spain, Ford could find itself paying vast sums in trade levies to move vehicles and parts across the English Channel.
Reuters reports that Ford’s chief financial officer, Bob Shanks, said on Wednesday that the company has “started to work on the eventuality of there being a hard Brexit”.
Shanks, who warned last week that a no-deal divorce would be “catastrophic”, added that Ford is “actually incurring costs, doing things now to prepare for that, so there will be an impact. It’s a material impact.”
Meanwhile, a spokesperson for Ford told Auto Express that “border friction” and a “deteriorating economic outlook” would also impact the company in the event of a no-deal Brexit.
The remarks are the latest in a series of warnings from the carmaker about its operations in the UK after Brexit.
In October, Ford’s European chief, Steven Armstrong, claimed that tax-free trading and no border checks were vital for Ford’s speedy and “complicated” supply line, the Daily Mail reports.
The news also follows mass lay-offs at Jaguar Land Rover earlier this month, which was blamed partly on uncertainty over Brexit.
However, the British carmaker also admitted that a slowing economy in China and a downturn in diesel sales had played a part in it laying-off 4,500 staff.