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Toyota Cautions About Midlands Hub Closure With No-Deal Brexit

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Toyota Motor Corporation (TM - Free Report) expects closing of production at its U.K. factory if Britain exits without any deal from the European Union (EU), per Bloomberg. Once closed, the company is uncertain of the plant’s reopening, which may take months. Incapability to ship parts required for car production from Europe has impelled Toyota to opt for this plan.

In 2017, the company’s factory, based in the Midlands, manufactured 150,000 Auris and Avensis cars, with components shipped from the EU. Toyota follows just-in delivery system for parts, which arrive at the site minutes or hours before vehicle assembling. Of the total vehicles produced, approximately 90% were shipped to the countries in the EU. Per the company’s website, the hub currently employs 2,500 people.

Except for Toyota, many automakers raised concerns on the uncertainty of cross-border tariffs if Britain exits the EU without a deal. Companies have warned about manufacturing disruptions due to tariffs and high chances of free trade loss.

Toyota Motor Corporation Price and Consensus

 

Similar to Toyota, BMW AG announced its decision to shut down its Mini plant in England for a month after Brexit on Mar 29. Another major Japanese automaker, Honda Motor Co., Ltd. announced that a no-deal exit would be very expensive for the company.

Price Performance

In the past six months, Toyota’s stock has lost 1.6%, outperforming 8.3% decrease recorded by the industry it belongs to.

 



Zacks Rank & Key Picks

Toyota currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Advance Auto Parts, Inc. (AAP - Free Report) , Navistar International Corporation (NAV - Free Report) and Cummins Inc. (CMI - Free Report) . Advance Auto Parts sports Zacks Rank #1 (Strong Buy) while Navistar and Cummins carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Advance Auto Parts has an expected long-term growth rate of 12.3%. Over the past six months, shares of the company have gained 47.1%.

Navistar has an expected long-term growth rate of 5%. Shares of the company have increased 9.5% over the past six months.

Cummins has an expected long-term growth rate of 11.6%. Shares of the company have increased 13.7% over the past three months.

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