The auto industry dodged disaster when the U.K. and European Union sealed a post-Brexit trade accord, but not before carmakers announced factory closures and called off plans to make several new vehicles in the country.
More damage may still be done even with last week’s deal. Automakers including Nissan Motor Co. might struggle to qualify some U.K.-assembled models for tariff-free export to the EU as they evaluate whether they source enough of their components locally. Costs associated with having to switch suppliers and the burdens of customs declarations, certifications and audits could still leave car companies convinced they’re better off investing elsewhere.
"This is still a thin deal with major implications and costs for automotive,” said David Bailey, a business economics professor at Birmingham Business School in England. "Much will depend on the degree of flexibility allowed and the degree of phasing in.”
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