BMW and Toyota investment in the UK may be hit by no-deal Brexit

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BMW and Toyota could leave UK after no-deal Brexit

Car producers Toyota and BMW have both warned that no-deal Brexit could affect on the production of their cars in the UK.

BMW told Sky News it could consider moving production of its Mini from the UK in a no-deal scenario.

Previously,  the head of Toyota’s European operations said a negative result could put future investment at its UK factory at risk.

Company bosses lose trust in the UK economy because of Brexit uncertainty.

Toyota’s factory near Derby is at risk, said Johan van Zyl to the BBC, and added, if the Brexit “hurdles” are too high it would undermine Toyota’s competitiveness.

BMW has said it might stop making the Mini at its Cowley plant in the event of a no-deal Brexit. That would put more than 4,500 jobs and more than 100 years of car-making at the site at risk.

The German BMW joined Toyota and Vauxhall owner PSA in an attitude that an uncontrolled exit from the EU would cost British workers their jobs. And, the Geneva Motor Show (Thu, Mar 7, 2019 – Sun, Mar 17, 2019) is coming with the UK automotive sector under murky water.

No bridge over troubled water

BMW board member Peter Schwarzenbauer told Sky News that the future of the Mini brand in the UK was under threat in the deficiency of a Brexit deal.

By the way, he is responsible for the Mini and Rolls-Royce brands.

Also, he added, if a “worst case” no-deal scenario happened, “we would need to consider what it exactly means for us in the long run”.

“For Mini, this is really a danger,” he said.

Schwarzenbauer said the firm would “need to consider” moving production from the UK as the company could not absorb the extra costs they would inevitably face.

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He also told the Reuters news agency at the Geneva car show that engine manufacturing, at Hams Hall in Birmingham, could be lost to Austria.

Previously, BMW chief executive Harold Krueger told the BBC that the carmaker was preparing “for a lot of scenarios” and was “very flexible” in its approach to production.

In the group with BMW is Toyota too

One of Toyota’s executives has warned a no-deal Brexit would make it “extremely complicated” to build new models at its British plants.

The signal by Japan’s biggest carmaker that no deal would make it less likely it would manufacture additional models in the UK follows Nissan’s recent reversal of a 2016 decision to build a sports utility vehicle in Sunderland and Honda’s planned Swindon closure.

It also comes against a backdrop of steep falls in investment in the UK car industry.

“If we don’t have access to the European market without a specific border tax, it seems to be extremely complicated to think about . . . introduction of another model,” Didier Leroy, chairman of Toyota’s European operations, said to the Financial Times.

Toyota has two factories in the UK, employing about 3,000 workers at its vehicle manufacturing plant in Burnaston and its engine production facility in Deeside in North Wales.

Where is the risk for the auto industry if scenario no-deal Brexit come true?

One risk of a no-deal Brexit is that British-made engines will no longer be counted as EU content.

These car giants could move some production of engines out of Britain if the country does not secure an orderly departure from the European Union.

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.

What is the possible scenario?

March 12, 2019: UK lawmakers will vote on new deal terms of the UK’s departure from the EU.

March 13, 2019: In case the deal is rejected, lawmakers will vote on whether to leave the EU with no-deal.

March 14, 2019: If lawmakers reject a no-deal Brexit, they will probably seek a delay to the U.K’s separation from the EU.

March 15, 2019: Two-day summit will start. EU leaders will meet to analyze the state of the Brexit process.

March 21, 2019: The UK is listed to leave the EU.

The bottom line

The fact is, this is the battle of nerves. In light of the possibility that BMW and Toyota, along with other investors who proclaimed that will leave the UK, the economy of Great Britain could drop hard. The state of suspense will not stay so long. The date of decision is so close.

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