BMW wants clarity over Brexit situation

25 June 2018

BMW wants clarity over Brexit situation

25 June 2018

German vehicle manufacturer BMW has warned the UK Government that it needs clarity on Brexit by the end of summer. Otherwise it will need to consider its position in the country.

While the company has announced it is to build an electric version of its Mini brand in Oxford, the UK’s current position on its relationship with the European Union following its withdrawal next year has a lot of businesses wondering about their investment in the country.

Speaking to the BBC, Ian Robertson, BMW’s UK boss, said: ‘If we don't get clarity in the next couple of months we have to start making those contingency plans... which means making the UK less competitive than it is in a very competitive world right now.

‘That is a decisive issue that ultimately could damage this industry.’

The news followed a warning by aircraft manufacturer Airbus that any ‘no deal’ result, which would see the UK fail to agree a customs and single market trade agreement, would be damaging for its business and could lead it to potentially move operations out of the country.

BMW has previously warned about the damage of Brexit uncertainty, and in May chief executive Harald Krueger said the company had to remain ‘flexible’ about production facilities.

Alongside Mini, BMW also builds Rolls Royce models in the UK and has around 8,000 employees in the country.

Responding to the comments, Health Secretary Jeremy Hunt suggested such announcements were ‘unhelpful’ during negotiations.

’It's completely inappropriate for businesses to be making these kinds of threats,’ he said on the BBC’s Andrew Marr show.

‘We are in an absolutely critical moment in the Brexit discussions and what that means is that we need to get behind Theresa May to deliver the best possible Brexit. The more that we undermine [Prime Minister] Theresa May, the more likely we are to end up with a fudge, which would be an absolute disaster for everyone.’

BMW is not the first automotive manufacturer to warn over the impact that a poor Brexit deal would have. However, with negotiations continuously reaching sticking points and time running out before a deal is concluded, the comments of Airbus together with the German manufacturer have injected a sense of urgency into the situation.

The UK has ruled out remaining in the customs union, which allows the 28 EU member states to send goods through ‘frictionless’ borders. However, there has yet to be any word on whether a deal will be made to replace this agreement. Any impact through delays would cost companies thousands.

Airbus, in its Brexit ‘risk assessment’ published on Thursday, said if the UK left the EU next year without a deal - leaving both the single market and customs union immediately without any agreed transition - it would ‘lead to severe disruption and interruption of UK production’.

A Government report in March also highlighted the impact any trade tariffs would have on the automotive industry. ‘Unless additional costs [of tariffs imposed on imports and exports] were to be passed on to consumers, the current profit margin of around £450 (€511) on a £15,000 (€17,000) car would be comfortably wiped out. Such an increase would inevitably have an impact on sales. One study has estimated that a 15% price impact would result in 550,000 fewer sales in EU countries per year, a fall of around 19%. Another study estimated the introduction of trade barriers to result in a £7.9 billion (€9 billion) decline in exports to the EU,’ it said.