How is the automotive industry preparing for Brexit?
A no deal Brexit could harm three quarters of automotive businesses in the UK, according to a new survey by the Society of Motor Manufacturers and Traders (SMMT).
The survey found that 74.1% of companies with UK operations believed a ‘no-deal’ scenario would damage their business, with fewer than 9% foreseeing any positive impact.
While we wait for the outcome of the latest round of negotiations, here are some thoughts of some of those businesses – including from this week’s motor show.
In an interview with Sky News at the opening of the Geneva Motor Show, the BMW board member Peter Schwarzenbauer (who oversees the Mini and Rolls-Royce brands) made the following statement.
“This [no-deal Brexit] would be really a huge burden for the Mini brand. If this would come, which is the worst-case scenario, we’d need to consider what it means for us in the long run. For Mini, this is really a danger,” he said. Asked if this could mean BMW moving out of Cowley, he told Sky News: “We at least have to consider it because we cannot absorb 10% costs on top of it.”
The company has already prepared extensively for its operations in the UK on the basis of Brexit happening on 29 March, with plants including its Mini factory in Oxford closing for the month of April for maintenance the carmaker would normally conduct in July.
“We are keeping a very close eye on developments and reviewing the entire spectrum of possible effects. We have noted with regret the outcome of the vote in the House of Commons. For us, this means a further period of insecurity and planning uncertainty.”
Toyota Motor Corp. warned that it may end manufacturing in the U.K. if the country crashes out of the European Union on unfavourable terms. On Wednesday, also at the Geneva Motor Show Johan van Zyl, the Japanese company’s head of Europe, told reporters
“If the business environment becomes very difficult to operate, of course those types of decisions should be on the agenda. But hopefully we will be able to avoid a withdrawal”
Meanwhile, Vauxhall and BMW have joined the list of manufacturers to start stockpiling parts to cover at least a few days of disruption. Brexit border delays threaten to disrupt the supply of parts from the EU to the UK immediately after the planned departure date, on 29 March.’
‘While preparations are ongoing, most large car manufacturers believe there is nothing they can realistically do to prevent damage from a no-deal Brexit, given the lean supply chains used in modern manufacturing.’
‘Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, the British industry body, said a no-deal Brexit was “not an option for the UK car industry”.’
‘”There will be an additional week of production stand-down… due to potential Brexit disruption,” JLR said in a statement.’
The company, which is cutting jobs because of a steep fall in sales, has previously warned about the impact of Brexit on its ability to source just-in-time components from mainland Europe.
Volkswagen have this to say – ‘In light of the current difficult situation we continue to prepare for all eventualities. Like the rest of the industrial sector, we need comprehensive clarity on the shape of future relations between the United Kingdom and the European Union very quickly. Any further delay in the Brexit decision-making process poses a risk to investments and jobs in the automotive industry which relies on long-term planning security with development cycles of up to five years. We can only appeal to all the parties involved to use the time gained to negotiate a solution acceptable to all stakeholders.
For the automotive industry, open market access and clear customs processes have priority in order to avoid any negative impact on just-in-time production and our European supply chains.
Irrespective of this, the United Kingdom will remain an important market for the Volkswagen Group, the second largest in Europe, as well as an important production and investment location through the Group’s British brand, Bentley Motors.’
The bosses of carmakers such as Ford and Nissan have warned that longer-term barriers to trade between the UK and the EU would threaten investment in British factories – potentially costing thousands of jobs in one of the few industrial success stories in Britain’s recent history. Delays of only a few hours at ports would be disastrous for companies that rely on parts arriving minutes before they are required in factories.
The bosses of carmakers such as Ford and Nissan have warned that longer-term barriers to trade between the UK and the EU would threaten investment in British factories – potentially costing thousands of jobs in one of the few industrial success stories in Britain’s recent history. The concern particularly is that delays of only a few hours at ports would be disastrous for companies that rely on parts arriving minutes before they are required in factories.
Lets all hope we have some clarity soon. At least then we can stop talking about it!