cars news 10: Jaguar Land Rover Predicts $1.5 Billion Loss if Brexit Passes

A new report claims Jaguar Land Rover could take a big financial hit due to the passage of Brexit (short for British exit), a U.K. referendum that would see the country leaving the European Union. British citizens tomorrow will vote on the referendum, which many companies like JLR say will result in significant losses in profit.

Reuters reports JLR stands to lose up to $1.5 billion by 2020 should Brexit pass. The prediction comes from two sources who allegedly have seen internal documents outlining the consequences of Brexit on the company’s financial future.

Should Britain exit the EU, the country would no longer have the benefit of duty-free trade within the union, resulting in heavy tariffs on exports and imports. Reuters reports JLR would be hit with a 10-percent tariff on exports, while importing parts from outside suppliers could tack on a 4-percent tax.

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In a statement emailed to Reuters, JLR said “as part of our standard business planning process, we regularly look at macro-economic and geo-political developments around the world. Like any other responsible global business, we have analyzed the impact of any potential U.K. departure from the EU. However, we are not discussing details of any internal business analysis.”

Reuters also obtained a message that JLR CEO Ralph Speth wrote to employees earlier this week. “It is inevitable that we would face increasing and higher tariffs, making our products less competitive in Europe,” he said in the letter.

Those predicted losses would stymie the resurgence JLR has experienced in recent years. Both Jaguar and Land Rover continue to strengthen their lineups and production has hit record numbers. Additionally, the company continues to invest heavily in R&D and plant expansions. That said, Reuters reports JLR is holding off on a number of projects to see how Brexit pans out. Plans for its new plant in Slovakia, for example, could change. That facility is estimated to cost $1.5 billion and was originally slated to open in 2018. One source told Reuters JLR may open an office in Belgium to offset costs, but would retain its main headquarters in the U.K.

Source: Reuters