By Costas Pitas and Edward Taylor
GENEVA (Reuters) – BMW could move some production of engines and its Mini model out of Britain if the country does not secure an orderly departure from the European Union, the German carmaker said on Tuesday, in the latest Brexit warning from the auto industry.
Britain, the world’s fifth-largest economy, is due to leave the EU on March 29 but an agreement between London and Brussels has been rejected by UK lawmakers leaving open the possibility of a chaotic exit that could hit trade.
One risk of a no-deal Brexit is that British-made engines will no longer be counted as EU content, pushing the total level in some cars below the threshold of around 55 to 60 percent required in many international trade agreements.
“We have some flexibility on the engine side with Steyr in Austria,” Peter Schwarzenbauer, the head of BMW’s Mini brand, told Reuters at the Geneva car show, referring to another BMW plant. “We would need to make some adjustments towards Steyr.”
“We are preparing to be able to do it. Like we are preparing warehouses in the UK to produce cars,” Schwarzenbauer said.
A final decision on whether to transfer some production of engines from Hams Hall in central England, where BMW built over 375,000 engines last year, to Austria has not yet been taken, Schwarzenbauer added.
Asked by Sky News if BMW could move Mini production out of its Oxford plant in southern England in the event of a chaotic Brexit, Schwarzenbauer said: “We at least have to consider it.”
Britain’s once booming car industry is already recording drops in sales, investment and output, with Japan’s Honda delivering the biggest blow so far by announcing plans to close its UK factory.
The industry, which employs about 850,000 people and is largely owned by foreign firms, has been rushing out plans to cope with a potential no-deal Brexit, such as building stocks and in some cases organising plant closures around Brexit day.
But Prime Minister Theresa May said last week that if UK lawmakers again rejected her Brexit deal, she would offer them a series of votes that could lead her to ask Brussels for a delay.
BMW said in September it was moving the annual maintenance shutdown for its Oxford Mini plant to April in case of Brexit disruption. The Goodwood plant of its luxury Rolls-Royce Motor Cars brand in southern England has made similar plans.
Torsten Mueller-Oetvoes, the CEO of Rolls-Royce Motor Cars, told Reuters a short Brexit delay “would make it even worse … because then all the prep measurements, in terms of pulling the shutdown forward and so on, would be immediately eroded.”
“If a delay is necessary, then it should at least continue for some time.”
BMWCEO Harald Krueger said earlier that if Brexit was delayed the company could postpone some contingency plans, but that the maintenance shutdown at Oxford remained set for April.
BMW made 234,183 cars in Britain last year, out of the country’s total production of about 1.5 million.
‘FUTURE IN DOUBT’
Japanese carmaker Toyota also called for clarity on Brexit.
“Frankly speaking, we would just like to get certainty as quickly as possible,” Johan van Zyl, president and CEO of Toyota Europe said at an event late Monday, echoing recent comments from UK luxury sports car maker Aston Martin.
Zyl said 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 have a negative impact on competitiveness of the UK operations, it will put the future in doubt,” he said, referring to the entire UK car industry.
Toyota made 129,070 cars at its Burnaston plant in central England in 2018 and is currently ramping up production of its new Corolla model.
Carlos Tavares, CEO of Peugeot and Citroen maker PSA Group, was more relaxed about a potential Brexit delay, saying he was in favour if the time was used to find a deal.
Daimler boss Dieter Zetsche, meanwhile, was hopeful a deal could be reached.
“It’s a game of poker. I am an optimistic person, and I hope that a no-deal Brexit is not realistic,” he said.