Why the UK auto industry fears a Boris Johnson pro-Brexit government

Incoming British Prime Minister Boris Johnson, who is the figurehead for the Brexit movement, will not be warmly welcomed by the UK car industry.

Johnson won his place as the new leader of the ruling Conservatives by promising the party's mainly anti-EU membership that he is committed to leaving the European Union on Oct. 31, even if that means leaving without the bloc without a trade deal.

Automakers with UK operations have warned that a hard Brexit will hit their profits, cost jobs and hit just-in-time supply chains but in the last three years Johnson has shown little sign that he takes the industry seriously.

In 2017 he brushed aside their concerns, writing on Facebook: "In the next 20 years I believe traditional car companies will vanish as we switch to automated vehicles."

There is no sign since that Johnson will listen to industry concerns even though Honda and Ford have said they are shutting factories in the UK. Ford said it is again getting ready for a no-deal exit by safe-guarding its supply chain and stockpiling parts.

On 24 July, Carlos Tavares, CEO of PSA Group, which owns the UK Vauxhall car company, told analysts on an earnings call: "No-deal cannot be considered. This would be very bad for the UK, very bad for Europe, very bad for all of us."

The auto industry stands to lose £50,000 ($62,250) a minute should the country crash out of the EU, because friction at the border will leave plants starved of parts, the Society of Motor Manufacturers and Traders said recently.

Johnson's problem with automakers with UK operations is the same as other British politicians who want Britain to exit the EU without a trade deal. The country's auto industry, which has boomed over the past 20 years presents an inconvenient truth, namely that the resulting tariffs and border complications will make the UK less competitive than before, not more.

In June 2016, just before the UK narrowly voted to leave the EU, Johnson wrote that the country's appetite particularly for German-made cars meant that it would be inconceivable that tariffs would be applied.

"We buy one fifth of Germany's entire car output. Tariffs would mean the Germans would be cutting their own throats. It won't happen," he said.

But EU has proved tougher on negotiations than first imagined by the pro-Leave camp. In response Brexiteers have had to either ignore automakers concerns or claim greater knowledge of the UK car industry than the industry itself.

In January this year Johnson sparked derision by claiming in a radio interview that he knew more about how to run an automaker than Jaguar Land Rover CEO Ralf Speth, who had just warned about job losses.

Johnson's frustration at the likes of BMW and aircraft maker Airbus pounding the same message out about the disaster of no-deal, that Johnson last summer reportedly declared "f**k business" at an official function, a report that he has not denied.

Will pragmatism win?

However, Johnson is known for changing his views if it's politically expedient to do so. In 2015 he was vigorously championing the UK car industry ahead of a general election, describing it "one of the most stunning turnaround stories in the economic history of this country."

He cited 2014's UK carmaking tally of 1.4m and compared it to the bad old days of the 1970s, when worker strikes and poor models made Britain's car industry a global joke.

It's possible that Johnson's political pragmatism will see him rejecting the 'leave no matter what' stance now he is in the driving seat.

He will have to get automakers on side. The only UK car company prepared to support Johnson's populist Brexit policies was tiny race-car maker Ginetta, which hosted a Leave campaign event with him in 2016.

As prime minister, Johnson needs to persuade the industry that staying loyal to the UK will not prove costly them in the long run. It could be that the Government's generous loan of half a billion pounds ($626m) to JLR to invest in electrification is the start of a campaign of a financial support to the industry, which could be the only answer to sway automakers if the UK leaves the EU with no deal.

Putting Brexit aside, corporate Britain has been largely welcoming of Johnson, seeing positive signs in his pro-enterprise attitude when he was London mayor.

“We need that optimism and energy,” ITV Chief Executive Officer Carolyn McCall said on Bloomberg TV Wednesday. “He was very pro-business, he invested in infrastructure.”

Johnson has hired pay-TV broadcaster Sky’s chief operating officer, Andrew Griffith, as his senior business adviser, giving him the job of improving the government’s relations with UK companies.

Johnson has pledged to restart Brexit talks with the EU, bringing "positive energy" and a "sense of mission" akin to the Apollo 11 moon landing to the negotiations.