BMW, Toyota: No-deal Brexit could make UK business untenable

Dive Brief:

  • BMW would “at least have to consider” moving production of the Mini from its current location in Cowley near Oxford, England in the case of a no-deal Brexit, Peter Schwarzenbauer, a member of BMW’s board, told Sky News. The company would not be able to absorb the additional tariff cost, Schwarzenbauer said.
  • “This would be a huge burden for the Mini brand,” he said. “And if this would come, which is the worst case scenario … we would need to consider what exactly it means for us in the long run. And for Mini this is really a danger, no doubt about it.”
  • In a separate interview with the BBC, CEO of Toyota Europe Johan van Zyl said they remain committed to their manufacturing operation in the U.K., but if a no-deal Brexit results in increased duties and larger trading hurdles, “then it is very difficult to think about the future.”

Dive Insight:

Next week will be a big week for Brexit. There is potential for three separate votes to take place and, at the end of it, there may be more clarity on what exactly is going to unfold.

Prime Minister Theresa May plans to bring forward a withdrawal agreement for a vote on March 12. If this fails, then a second vote will take place in Parliament on March 13 on whether there should be a no-deal Brexit — the scenario both Schwarzenbauer and van Zyl lamented. But if both of these votes fail, then another vote will take place on March 14 that could push back the March 29 Brexit deadline.

Toyota hopes the European Union and U.K. will end up with a regulatory framework that allows for no tariffs and frictionless trade, said van Zyl.

Other companies, including Honda and Dyson, have already decided to move parts of their operations out of the U.K.

Recent meetings between U.K. and EU negotiators have not offered much hope.

“No solution has been identified at this point,” Margaritis Schinas, a spokesperson for the European Commission, said this week, according to Reuters.

06 March 2019 | Matt Leonard | Supply Chain Dive

https://www.supplychaindive.com/news/bmw-toyota-warn-of-no-deal-brexit-blowback/549874/