Nissan has said it may pull potential new investment in its Sunderland plant if the UK does not commit to compensation for any tax barriers that arise from Brexit.
Chief executive Carlos Ghosn, speaking at the Paris auto show yesterday, said Britain could be heading towards a “hard Brexit” that could leave Nissan and other companies paying tariffs to export UK-assembled cars to EU markets.
"If I need to make an investment in the next few months and I can't wait until the end of Brexit, then I have to make a deal with the UK government," Ghosn told reporters.
"You can have commitments of compensation in case you have something negative. If there are tax barriers being established on cars, you have to have a commitment for carmaker who export to Europe that there is some kind of compensation."
Ghosn also told the BBC that 10 per cent tariffs would be a "handicap" and that its plant in the northeast of England could lose competitiveness if the UK has to trade with the EU under World Trade Organization rules.
The Japanese carmaker, which builds around a third of Britain's total car output at its Sunderland plant, is due to decide early next year on where to build its next Qashqai sport utility vehicle.
Nissan has previously said any future investment will hinge on what type of Brexit deal the government negotiates, because so much of its output is sent to the continent.