Brexit Will Cost Car Company Millions of Euros

Brexit Will Cost Car Company Millions of Euros. A no-deal Brexit would cost German automaker BMW "hundreds of millions" of euros, with increased tariffs passed on to consumers in the UK and mainland Europe, the group's chief financial officer warned.

Nicolas Peter said the high-end maker, which produces Mini models at Oxford, had "[price hike] plans in the drawer" that would go into effect if a deal was not reached before the end of the year.

But he said the Munich-based company was confident it wouldn't have to shut down its Oxford plant immediately after a no-deal Brexit because BMW had stockpiled components.

Brexit Will Cost Car Company Millions of Euros

“Technically we are ready,” said Peter. "We have the capacity to transport cars and parts even in a no-deal scenario." The BMW UK plant produces over 220,000 Minis per year and is a major employer in the region.

The executive said increasing customs controls would not be the biggest challenge for BMW's UK business, and that the company "would be at the forefront of logistics very quickly".

"But there will be a 10 percent tariff on cars," he warned, "and that would have a negative effect [on BMW] in the median triple-digit range of millions of euros per year."

This “substantial” impact on results would not be fully absorbed by the group, which “would lead to higher costs,” added Peter. “The minis in Europe and the BMWs in the UK will cost more,” he confirmed, but without providing further details on the level of any increase.

The exposure of German carmakers to Britain has declined significantly in recent years, with just 590,000 cars exported to the country in 2019, up from 810,000 in 2015, according to industry lobbyists, the VDA. However, the UK is the fourth largest market for BMW.

While he said it was too early to say whether the no-deal tariffs would affect the long-term future of the Oxford plant, Peter said BMW was "positioned flexibly" on the production of Mini.

The company also had options to expand production in Germany and China, he said, where it is developing an electric version of the car.

The group, which also owns Rolls-Royce, recently announced that it will move part of Mini production from the Netherlands to Leipzig, Germany. Peter said BMW "did not participate" in the negotiations between the EU and the UK, but hoped "that a reasonable solution will eventually be found".