LONDON--Japanese carmaker Toyota intends to build the next version of its Auris car at its British car plant on the assumption that the government secures a transitional Brexit deal, two sources familiar with the matter told Reuters.
The final decision is due to be made by the end of the year, according to the sources and a government briefing document released to Reuters under a freedom of information request. The new Auris would keep one of Britain's biggest car plants operating, secure thousands of jobs and provide a welcome endorsement to Prime Minister Theresa May.
Toyota builds the current generation of Auris hatchbacks at its Burnaston plant in central England, with the run due to end in around 2021, but firms make model decisions up to three years in advance partly to organise supply chains. "Toyota UK management have a working assumption that the UK will retain the next generation Auris because it is too early to determine the nature of the trading relationship with the EU," one of the two sources familiar with the matter told Reuters.
"They believe that there will be a transitional period," according to the source who said the firm was highly likely to build the next-generation Auris in Britain.
The final decision will be made by Toyota's board by the end of the year and announced shortly afterwards, the sources said.
Toyota declined to comment when contacted by Reuters. A spokesman at Britain's business ministry said it was a commercial matter for Toyota.
In March, the company said it would invest 240 million pounds ($314 million) to upgrade to a new global car-building platform but has not confirmed which models it will build going forward. The platform investment decision was helped by a government letter reassuring the firm over post-Brexit trading arrangements, sources have told Reuters.
Britain's car industry is concerned that 10 percent tariffs, border checks and loss of free access to Europe could hit the viability of their plants if May fails to secure a good Brexit deal. May said last month that she would seek a Brexit transition period of around two years after Britain formally leaves the EU in 2019, aiming to appease businesses concerned that the country could leave the European Union without a deal.
Finance minister Philip Hammond emphasised this week the importance to businesses of a period which would ease Britain out of the European Union and into a new trade relationship, causing as little disruption as possible.
