Carmakers step up warnings over disorderly Brexit

Carmakers step up warnings over disorderly Brexit
Members of the board of Management of BMW AG Harald Krueger, Pieter Nota and Andreas Wendt pose for a photograph during the first press day of the Paris auto show, in Paris, France, October 2, 2018. REUTERS/Benoit Tessier -
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By Edward Taylor and Laurence Frost

PARIS (Reuters) - Carmakers ratcheted up their warnings on Tuesday over a disorderly Brexit, with France's PSA Group and Germany's BMW both saying UK production would suffer if Britain leaves the European Union without a deal.

With less than six months before Britain is due to leave the EU on March 29, businesses are increasingly alarmed about the lack of agreement over future trading relations and the possibility of tariffs, delays at ports and extra red tape.

The car industry, one of Britain's few manufacturing success stories of recent decades, is particularly at risk given the thousands of parts, engines and finished models that move between Britain and the continent every day.

BMW boss Harald Krueger told the Paris Motor Show he saw a "50:50 chance" of a disorderly, or 'hard Brexit', and that this would lead the company to shift more production of its Mini vehicles - currently focussed on its Oxford plant in southern England - to the Netherlands.

"I told (UK Prime Minister) Theresa May and the European Union that if there is a hard Brexit, both sides are losers. We will no longer fulfil trade agreements and then we are forced to build the car in the Netherlands," Krueger told journalists.

Maxime Picat, the European head of Peugeot and Citroen maker PSA Group, also said there would "necessarily be an impact" on its UK production if Brexit meant the group had to make cars separately for British and EU markets.

"We're not going to be dogmatic about it, and there's no question of punishing the UK," he told Reuters in an interview at the show.

"We'd take a look at our two factories, the state of our business, and look for a solution. But I don't know where that will lead us in terms of the sustainability of our sites."

Dieter Zetsche, the chief executive of German carmaker Daimler , also told the Paris event that scenarios involving a disorderly Brexit were "highly worrying."

The executives' comments come as the British prime minister said she was preparing to make a new offer to the EU aimed at breaking the deadlock in the Brexit talks, and after other carmakers, including Jaguar Land Rover, have warned of the risk to jobs from a hard Brexit.

Automakers are also facing a range of other challenges, including the rollout of costly electric vehicles, tougher emissions rules and the potential disruption to trade from the rise of protectionism.

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(Additional reporting by Costas Pitas and Joseph White; Writing by Mark Potter; Editing by Keith Weir)

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