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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 British 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 toward 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.
Britain's car industry, which employs around 850,000 people and
is largely owned by foreign manufacturers, has been rushing
through plans to cope with a potential no-deal Brexit, such as
building up inventories and in some cases organizing plant
closures around Brexit day.
FUTURE IN DOUBT
However, 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 Mini plant in Oxford, southern England, to
April in case of Brexit disruption.
"We have made preparations. If Brexit is delayed we can postpone
some measures, but the early summer break remains scheduled for
April," CEO Harald Krueger said at the car show.
Shutdowns and stockpiles take time and money to arrange, as for
example employee holidays and suppliers are affected, making
them hard to change.
And so while carmakers are keen to avoid a no-deal Brexit, they
also do not want the process to drag on.
BMW made 234,183 cars in Britain last year, out of the country's
total production of about 1.5 million.
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
favor 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.
(Additional reporting by Laurence Frost, Jan Schwartz and Gilles
Guillaume; Editing by Mark Potter)
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