Car manufacturers offer mixed views as Brexit approaches

06 March 2019

Car manufacturers offer mixed views as Brexit approaches

6 March 2019

With the UK leaving the European Union on 29 March, and no deal yet in place, carmakers are increasing their vocality on the subject.

The Geneva International Motor Show (GIMS) is taking place over the next fortnight, and gives media access to car manufacturers, with many asking about their thoughts on the current political situation. While some state that they are not too worried by a potential no-deal Brexit, others are warning of consequences.

BMW warned that it could move some production of engines and its Mini cars out of Britain should the fog not clear. The manufacturer highlighted that no deal would mean British-built engines would not count as EU content. For BMW, this would push the local content level in some cars below the percentage threshold for EU parts required in many international trade agreements, known as ‘rules of origin’.

‘We have some flexibility on the engine side with Steyr in Austria,’ Peter Schwarzenbauer, the head of BMW's Mini brand, said at GIMS, referring to another BMW plant. ‘We would need to make some adjustments toward that plant, however.

‘We are preparing to be able to do it. Like we are preparing warehouses in the UK to produce cars.’

Asked by Sky News whether BMW could move Mini production away from its base in Oxford, Schwarzenbauer said ‘We at least have to consider it.’

BMW said in September that it was moving the annual maintenance shutdown for its Oxford plant to April, hoping to avoid potential production bottlenecks caused by supply chain issues.

‘We have made preparations. If Brexit is delayed we can postpone some measures, but the early summer break remains scheduled for April,’ CEO Harald Krüger said at the show.

Japanese carmaker Toyota has also again called for clarity, with concerns over investment in its plants at the heart of its worries.

‘We would just like to get certainty as quickly as possible,’ Toyota Europe CEO Johan van Zyl said, adding that Brexit planning had come at a ‘huge cost’ and warned Britain needed to secure a frictionless trade deal with the EU.

‘If anything happens between the EU and UK that will hurt the competitiveness of the UK operations, it will put the future in doubt,’ he said, referring to the entire UK car industry.

Positive thinking

Daimler boss Dieter Zetsche, meanwhile, was hopeful a deal could be reached. ‘It's a game of poker,’ he said. I am an optimistic person, and I hope that a no-deal Brexit is not realistic.’

Bentley, the luxury carmaker owned by Volkswagen, has also stated that it will not look to move production overseas in the event of a ‘hard’ Brexit. ‘There is a massive economic benefit in keeping production together [in one place],’ chief executive Adrian Hallmark told The Times. ‘We have been [in Crewe] for 80 years, and we are staying. This year we will see good growth and a return to some degree of profitability. We’ve been through worse than Brexit.’

Another British manufacturer, Aston Martin, is also preparing for potential challenges. The company has increased its parts localisation in the UK to more than 55% to protect itself when the country leaves the EU, up from just 29% in 2017. This will also help with the aforementioned ‘rules of origin’.

In February, at the annual results event of Opel/Vauxhall, PSA Group CEO Carlos Tavares gave a mixed view of the company’s operations in the UK should a deal with the EU not be reached. ‘We can go to the dark side and say, well perhaps we have to shut down plants. And if we have to make unpopular decisions we will,’ he said.

The other outcome is that Vauxhall benefits from Brexit and finds success as one of the last true British car brands, Tavares added. ‘PSA is uniquely positioned in the UK. Let us not forget that the Vauxhall brand is warm to the hearts of UK consumers. We may have the best opportunity to survive and make the best business out of it.’