Some of Japan’s largest automobile companies such as Nissan and Honda moved into the UK during the 1990s. They saw the UK as being the “preferred gateway” into the European market. Now, with Britain poised to exit the EU, these companies have begun moving out of the UK.

Brexit Day is scheduled to be the 29th of March, this year. With only slightly over a month remaining, the UK and EU still have not agreed on an exit deal. The UK leaving the EU with no-deal Brexit would be catastrophic for the economy, with no transition period available for the UK to arrange trade deals with other nations.

One particular country that is worried about the backlash of no deal Brexit is Japan. In December 2018, Japan’s Prime Minister also warned the UK to not leave EU without a deal to “ensure transparency, predictability and legal stability in the Brexit process”. Now, many of Japan’s top companies including Sony, Nissan and Honda are moving out of the UK, either back into Japan, or into the EU in nations like Germany and the Netherlands.

Car companies in the UK have been hit badly since the announcement of Brexit. UK car production had originally been on a rising trend, growing from 1.27 million units produced in 2010, to 1.72 million by 2016. Since the 2016 Brexit referendum, car productions have fallen back down to 1.51 million units produced and this number is likely to continue dropping.

Nissan originally confirmed that the X-Trail SUV and the Qashqai would be produced in their Sunderland car plant, which provides over 7,000 jobs to the local community.

I am pleased to announce that Nissan will continue to invest in Sunderland. [. . .] The support and assurances of the UK Government enabled us to decide that the next-generation Qashqai and X-Trail will be produced at Sunderland.

Carlos Ghosn- CEO and Chairman of Nissan (2001-2018)

Despite this, Nissan has announced that they would not be producing its X-Trail SUV in its Sunderland plant but said that the Qashqai, will continue production.

One week later, Honda went one further and decided to close its Civic manufacturing plant in Swindon by 2021. Honda is the largest car company to have left the UK, announcing that it would close its ‘Civic’ manufacturing plant in Swindon by 2021. This would result in 3,500 job losses.

Despite the exits of these large transnational corporations, I believe this “Japanese Exodus” is not as bad as it seems. Although the timing of the exit of these companies is coincidentally close to Brexit, their exit might not actually be attributed to Brexit.

“This is not a Brexit-related issue for us, it’s being made on the global-related changes I’ve spoken about. We’ve always seen Brexit as something we’ll get through, but these changes globally are something we will have to respond to. We deeply regret the impact it will have on the Swindon community.”

Ian Howells- Honda Senior Vice-President

Honda’s Senior Vice-President announced that their exit from the UK market was due to global changes in the car industry and had nothing to do with Brexit. The BBC also says that Honda “sells many more vehicles in North America, Japan and China than it does in Europe.” This is a great example of “opportunity cost” because it would be more profitable for Honda to focus on markets where it performs better to maximise its profits, therefore, they are moving away.

“The continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours [Nissan] to plan for the future”

Nissan Motors

Nissan also said that the cancelling of the production of the new X-Trail SUV in Sunderland was due to business reasons, but also mentioned that Brexit was having an impact on the company. The X-Trail and the Qashqai produced in the Sunderland plant both have diesel-powered engines, however, diesel cars are dying out in Europe. Rome has even set a plan to ban all diesel cars in the city centre by 2024 to help reduce pollution. This is resulting in a lack of demand for Nissan’s diesel cars, and because of this, Nissan’s car production in the UK fell by 10.8% in 2018.

Overall, I believe that the exit of these large Japanese car companies is in fact not due to Brexit, however, it is due to a variety of reasons, including the low demand of diesel cars and the low benefits of staying in the UK compared to moving business elsewhere.