June 20, 2017 / 11:47 AM / 2 years ago

Honda not clear if UK listening to sector's Brexit needs

LONDON (Reuters) - Japanese carmaker Honda (7267.T) called on British politicians to keep the benefits of the European customs union and single market in negotiating a European Union exit, but said it remained to be seen whether they were listening.

A Honda logo is seen on media day at the Paris auto show, in Paris, France, September 29, 2016. REUTERS/Benoit Tessier

Honda said no deal after two years of talks would likely damage suppliers and disrupt output and said it was discovering more cost and complexity as it examined the consequences of leaving the European customs union.

Carmakers are worried that just-in-time delivery of parts, which allows for efficient production lines, could be slowed down by new regulations, border checks and even tariffs if there is a cliff-edge Brexit with no interim deal.

The firm said it was engaged in discussions with Prime Minister Theresa May’s government, which lost its majority in a botched snap election on June 8.

“Whether they are listening or not I really don’t know,” Honda Europe Senior Vice President Ian Howells told Reuters on Tuesday, when asked whether politicians were trying to get a deal which maintained as many current benefits as possible.

“We will see I think as the negotiations progress how closely they have been listening to us and industry in general,” he said. “There are huge amounts of unknowns.”

Earlier, Chancellor of the Exchequer Philip Hammond appeared to soften the government’s mantra that no Brexit deal would be better than a bad one by saying he would seek to keep current customs border arrangements until new ones were in operation.

Honda, which builds around 8 percent of Britain’s 1.7 million cars at its southern English plant in Swindon, said any gulf between British and EU regulation as a result of Britain leaving the single market could also hit output.

“At the moment of course, produce a car, save for the fact that it’s left and right drive, the car is identical,” said Howells, regarding exporting from its plant to the continent.

“If that divergence starts to happen because regulatory-wise, Europe doesn’t recognise the UK, Europe doesn’t recognise the UK, then potentially we end up with a more costly production process that starts to hit our efficiency,” he added.

Reporting by Costas Pitas; editing by Alexander Smith

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