Toyota invests £240m in Derbyshire car plant but issues Brexit tariff warning

'Continued tariff-and-barrier free market access between the UK and Europe vital for future success' says car manufacturer's president

Toyota has pledged to upgrade the site in Burnaston, which employs around 2,500 people (Reuters)

Toyota will invest a further £240m in its Derbyshire car plant, the company announced on Thursday.

Starting this year, Toyota has pledged to upgrade the site in Burnaston - which employs around 2,500 people - with new equipment, technologies and systems.

The news will come as a welcome boost for an industry facing a difficult future if the UK leaves the EU without a favourable trade deal.

“Continued tariff-and-barrier free market access between the UK and Europe that is predictable and uncomplicated will be vital for future success,“ Dr Johan van Zyl, president and chief executive of Toyota said in a statement.

Investment in the industry fell to £1.66bn last year from £2.5bn in 2015 amid uncertainty over Brexit, figures from Society of Motor Manufacturers and Traders show.

More than half of the cars produced in the UK last year were exported to the EU, while many of the component parts are imported from the trading bloc, meaning any barriers could be costly.

World Trade Organisation tariffs on vehicles are 9.8 per cent while on average the EU imposes a 6 per cent tariff on car imports through its various trade deals.

British exports may also have to overcome a host of non-tariff barriers such as “rules of origin” requirements, which state that a minimum percentage of parts must be sourced from within the country of production.

Dr Van Zyl said: “We are very focused on securing the global competitiveness of our European plants. We welcome the UK Government funding contribution for this activity.

“Our investment demonstrates that, as a company, we are doing all we can to raise the competitiveness of our Burnaston plant in Derbyshire."

The Burnaston investment programme includes up to £21.3m support from the Government for training, research and development and enhancements of the plant’s environmental performance.

Toyota has been producing cars at the Burnaston factory since 1992 and made around 180,000 vehicles there last year.

Despite uncertainty around the terms of the UK’s departure from the EU, Nissan has committed to expanding Sunderland factory and Jaguar Land Rover has continued with its investment plans.