GENEVA (Reuters) - Britain’s car industry may never be able to boost the level of local content to over half in its cars to meet the standards set in some bilateral trade agreements, the chief executive of the country’s biggest carmaker Jaguar Land Rover told Reuters.
Only around 40 percent of the parts that go into the average British-built car are made domestically and some trade deals require between 50 and 55 percent local content, a factor which could be crucial for post-Brexit trade.
After Prime Minister Theresa May said Britain would leave the single market and potentially the customs union when it exits the European Union, there has been greater focus on the manufacturing supply chain.
British-built cars can currently count EU-made content but that could change depending on the terms of the Brexit deal, with Nissan (7201.T) last week calling for a supplier fund to help boost the number of locally-made components.
Yet the required investment in businesses and skills could take years to bear fruit, and the volumes involved may not justify the spending.
“It will take a very long time, if at all it can be managed,” JLR (TAMO.NS) Chief Executive Ralf Speth told Reuters.
“Jaguar Land Rover is the biggest automotive company in the UK and the only one which really designs, engineers and also produces in the UK. The volume is still too small to really attract a huge Tier 1 supplier,” he said.
Britain lacks major suppliers such as Bosch or Michelin which help major carbuilding nations such as Germany and France respectively to achieve a higher level of local components.
Reporting by Costas Pitas; Editing by Mark Potter