Jaguar Land Rover, Britain's biggest carmaker, estimates its annual profit could be cut by 1 billion pounds ($1.47 billion) by the end of the decade if Britain leaves the European Union, according to two sources familiar with the company's thinking.
The worst-case-scenario estimate is in internal documents seen by both sources that were prepared by the firm's chief economist, David Rea, to outline the possible consequences if Britons vote to leave the world's biggest trading bloc. It gives an insight into the level of concern at a major company about the uncertainties of a future outside the EU.
The rapidly-expanding firm, which traces its history back to 1922 and is headquartered in Coventry, central England, has also looked into opening a European office were Britain to quit the bloc, both sources said. It has also put on hold starting major work on a plant in Slovakia announced in December, as well as negotiations on a deal to lease property at Silverstone race track because of the uncertainty surrounding Thursday's vote, they said.
The 1 billion pound decline in pre-tax profit by 2020 would apply if Britain returned to World Trade Organisation rules for trade with Europe, involving a 10 percent tariff on exports and an inbound tariff of roughly 4 percent on components, the sources said.
"It may at worst cost us about 1 billion pounds," said one of the sources when asked how Jaguar Land Rover (JLR) had phrased the wording in the 89-page report, entitled 'Referendum: The View'.
A second source said the number had featured in an internal presentation shown to the board.
The company made a 2015/16 pre-tax profit of 1.6 billion pounds. JLR, which is owned by owned by India's Tata Motors, sold almost a quarter of its over 520,000 cars in its largest market Europe last year, confirmed it had looked into the impact of Brexit.
"As part of our standard business planning process, we regularly look at macro-economic and geo-political developments around the world. Like any other responsible global business, we have analysed the impact of any potential UK departure from the EU. However, we are not discussing details of any internal business analysis" a JLR spokesman said in an emailed statement.
Businesses have been reluctant to talk about contingency plans for Brexit but carmaker Ford, which only builds engines in Britain, said it could face tariffs of 2.7 percent on engine exports and import tariffs of up to 10 percent on incoming vehicles – according to a copy of a letter sent to employees on Monday seen by Reuters.
'Leave' campaigners argue that Britain should be able to negotiate a tariff-less trade with France and Germany for its cars because French and German models are so popular with British drivers.
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