Toyota's Euro Invoicing Requirement Sparks Concern for UK Suppliers

Concerns have been raised for the thousands of motor component suppliers in Britain after Toyota, Japan's largest carmaker, announced that it would require UK suppliers to conduct business in euros for contracts related to its replacement for the Burnaston-built Avensis. The news comes as a blow to the UK motor industry, which has already been affected by a similar euro-invoicing requirement by BMW during its ownership of Rover last year.

Key Takeaways:

• Toyota will be requiring a "small number" of its 120 suppliers to invoice in euros for future business related to its replacement for the Burnaston-built Avensis.
• Nissan and Honda, the other two major Japanese carmakers with plants in Britain, have reassured suppliers that they have no intention of asking them to bill in euros.
• The three Japanese carmakers source at least 70% of their parts for British plants inside the country, despite claiming that the same components could be acquired in continental Europe 20% cheaper.
• Toyota, Nissan, and Honda have all stated that there is no policy to source more supplies outside the UK, but privately, Toyota officials say new models will see more components imported.
• Carlos Ghosn, Nissan president, has warned that the high level of sterling could threaten new manufacturing investment by Nissan in the UK.
• The motor industry's biggest suppliers are still reeling from last year's introduction of a euro-invoicing requirement by BMW during its ownership of Rover, which led to a 10% squeeze on suppliers.

Statistics:

• Toyota spends nearly £500 million a year with suppliers in Britain.
• Nissan is expected to become the UK's biggest carmaker this year, with output of over 300,000 cars.
• Honda will be producing nearly 200,000 cars a year at its Swindon plant in Wiltshire by next year-end.
• Selective use of the Euro by British suppliers could introduce an additional 20% cost for parts sourced on the continent.
• Over the next two years, UK suppliers will start to pay a more observable price for sterling's strength.

Sources:

• [1] Yoshio Ishizaka, senior managing director of Toyota, as quoted in the article.
• [2] Nissan, as quoted in the article.
• [3] Honda, as quoted in the article.
• [4] Carlos Ghosn, Nissan president, as quoted in the article.
• [5] BMW, mentioned as having introduced a euro-invoicing requirement for Rover suppliers last year.