Toyota UK factory faces uncertainty as EU backs cars 'made in Europe'

The future of Toyota’s factory in Derbyshire has been thrown into uncertainty by new European Union rules which threaten the company’s ability to import cars from the UK into the bloc. The Burnaston site, which opened in 1992 and produces around 100,000 cars per year, currently handles production of the Corolla hatchback - but that car is coming to the end of its lifecycle and the company says any decisions on the plant’s future rest on its ability to continue supplying cars to Europe. “We’re working very hard to make sure we have a sustainable route forward” for the Derbyshire facility, Toyota Europe’s chief corporate officer Matt Harrison told journalists at a strategy briefing on 15 October, adding that the company is “in discussions about next-generation C-segment models and platforms which brings Burnaston into play”. However, he said “there are a lot of uncertainties” surrounding the plant, chiefly concerning the European Union’s new Industrial Accelerator Act (IAA), which Harrison said “is a bigger threat, frankly, than the ZEV mandate”. The IAA framework has been designed to boost the resilience and viability of the European industry in a challenging global market environment, with a particular focus for the region’s automotive sector on new ‘Made in Europe’ criteria which incentivise production and procurement within the region. The rules mandate that government fleets of member states use cars made within the EU, and large corporations must use them to comply with fleet emission targets. Certain incentive schemes at a country level are restricted to EU-built cars, too, while car makers using locally sourced low-carbon steel can offset up to 7% of their fleet emission targets. The scheme is designed to protect local players in the face of intense competition – particularly from newcomer Chinese brands – and strong global trading headwinds, but Toyota says it risks making conditions untenable for some of the EU’s biggest sellers who produce outside the bloc - including Toyota itself, which builds the Corolla in both the UK and Turkey. Harrison specifically referenced the potential exclusion of non-EU-built EVs from Europe’s corporate fleets – representing 50% of the market – under IAA as one inhibitor to Burnaston’s viability. Under the scheme’s ‘made-in-Europe’ proposals, UK-built cars could be also be excluded from public procurement fleets, which account for a smaller but still significant 2% of the EU car market, and excluded from any member state-backed subsidy schemes for electric vehicles. In the context of Burnaston’s future, Harrison said, IAA was a “bigger headache” than the UK’s Zero-Emission Vehicle (ZEV) mandate, which other manufacturers have cited as a potential obstacle to continued vehicle production in the UK. Barring the Corolla from Europe’s crucial fleet market would severely limit its commercial prospects in the region. Toyota is proposing that the IAA framework for the automotive industry is relaxed, so that the ‘made-in-Europe’ criteria which underpins it is broadened to include vehicles made by key EU trading partners: the UK, Japan, Canada, South Korea and Turkey - where Toyota has another Corolla production facility. Renault Group boss François Provost earlier this week also called for the UK to be included in the IAA, and urged the UK government to follow the EU in imposing tariffs on Chinese EV imports. UK business secretary Jonathan Reynolds, though, has said the government will not impose tariffs to avoid risking retaliation from China, a key export market for UK automotive - a decision at stark odds with EU trading policy. The EU built 11 million cars last year, compared to China’s 27m - but if the net were widened to incorporate those “close trading partners” in the IAA policy, the figure would have been 31m, Toyota said. “That’s the scale Europe needs to compete effectively on the global stage,” said Harrison. “Europe will not achieve such scale by pushing away.” The EU needs to move from ‘made in Europe’ to ‘made with Europe’, Toyota said, highlighting the substantial role the company plays in sustaining the region’s industry, in which it has invested more than €13bn and employs more than 25,000 people. The company says that its total tax bill in Europe for 2025 was €440m – a contribution equivalent to that of a nation like Estonia. “Toyota is not a guest in Europe. Toyota is a European manufacturer and an important contributor to Europe’s automotive industry,” Harrison emphasised, reinforcing the company’s argument that its market share in the region should not be artificially stifled by protectionist regulation, but rather protected. He added that regulatory clarity would be fundamental to future decisions around Burnaston’s future, but emphasised that “our full intention would be to find a sustainable path forward for it”. “It depends on what level of incentives we are being shut out of, and for what period of time those incentives are realistically going to be kept in place.” Burnaston produces 50% fewer cars than it did ten years ago, and is subject to substantially inflated costs of labour and energy in the UK compared to other countries in Europe, but Harrison said Toyota was “working very constructively with the government” on those issues, and anticipated that “more support on things like energy costs” was likely in line with prime minister Andy Burnham’s reindustrialisation strategy. “What we need is no more barriers to get in the way,” he said. “If we can avoid UK manufacturing and assembly being shut out of IAA, then there’s absolutely the capability to find the right path forward in Burnaston and to bring next-generation vehicle production there - that’s our top priority”. “We’re not thinking about alternatives unless we’re put in a position where we’re cut out.” Pressed by Autocar for a timeline on a decision, given that the current-generation Corolla has been on sale for seven years and is due to be replaced by a radical new model – with the option of ICE and EV power – by 2030, Harrison said there was little urgency as any next steps for Burnaston (and its Turkish factory) rested on the EU’s ongoing relationship with external trading partners. “We’re not at a point where we have to make a decision tomorrow; for the next few months, we can get as much regulatory clarity as possible in order to make the right decisions, and then we will work on the best solution to find a sustainable path forward.” “We think we need the production footprint we have in Europe - we're not over capacity; we're not looking to reduce; we're not looking to give up on volume or market share in Europe. We're looking to protect it. “So it's really just a question of: what do we learn from the regulation and how do we adjust a plan?” He suggested that one potential option for Burnaston would be to skirt the made-in-Europe regs by ramping up the amount of cars it exports to countries outside the EU, which currently takes around 80% of its output. “It doesn’t mean it's some sort of terminal prognosis on Burnaston. We have highly valued staff and a long history there, a lot of pride in that site and those individuals. So we will not give up. We want to find a sustainable path forward, and I'm confident we can do that.”

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Toyota UK factory faces uncertainty as EU backs cars 'made in Europe'

No decision yet on Burnaston's future after Corolla, as Toyota calls for EU to include UK in local production incentives

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Toyota UK factory faces uncertainty as EU backs cars 'made in Europe'

No decision yet on Burnaston's future after Corolla, as Toyota calls for EU to include UK in local production incentives

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