(Bloomberg) -- Nissan Motor Co. may ask the U.K. to compensate it for any negative consequences resulting from the nation's departure from the European Union as a condition for making new investments in the country, Chief Executive Officer Carlos Ghosn said.
Further spending decisions will depend on clarifying Britain's relationship with the EU once it exits, Ghosn said Thursday at the Paris Motor Show. Nissan built one in three cars in the U.K. last year, and about 80 percent of its production there is exported, exposing the Yokohama, Japan-based carmaker to risks if tariffs are imposed.
“What is difficult today is the uncertainty,” Ghosn, who's also CEO of French carmaker Renault SA, said in an interview Thursday with Bloomberg Television. “What are going to be the conditions of the Brexit?”
The U.K.'s vote to leave the EU may cost automakers about 2.8 million light-vehicle sales through 2018, researcher IHS Markit said in June. Brexit may lead to levies of as much as 10 percent on vehicles built in the U.K. and exported to the EU, while components may face a 2.5 percent tariff, according to the Society of Motor Manufacturers and Traders, the nation's auto industry association.
Nissan shares fell 2.1 percent to 982.7 yen at the close in Tokyo, reaching the lowest price since Aug. 26. The stock has dropped 4.3 percent since June 23, when the U.K. held the referendum that decided on its departure from the EU.
Government discussions
The Japanese carmaker is discussing options with the U.K. government, though it hasn't asked for anything so far, Ghosn said. Nissan's factory in Sunderland, England, has a workforce exceeding 6,000 employees, and the plant's suppliers employ about 24,000. The site produces Nissan's Qashqai, Note, Juke and Leaf models.
At the Paris show, Ghosn outlined a system that would give “some kind of compensation” for carmakers that export to Europe in the event the EU establishes new tax barriers when the U.K. departs the trade bloc.
“This is a position we have already voiced to the British government, saying that if you want to know if we want to invest or not, please tell us what will be the new conditions of the relationship between the U.K. and Europe,” he said at a press conference.
--With assistance from Ania Nussbaum
To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net, Caroline Hyde in Paris at chyde3@bloomberg.net, Ania Nussbaum in Paris at anussbaum5@bloomberg.net.
To contact the editors responsible for this story: Chua Kong Ho at kchua6@bloomberg.net, Chris Reiter at creiter2@bloomberg.net, Craig Trudell, Tom Lavell
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
