Toyota and BMW warn no-deal Brexit could hit UK investment

Car giants Toyota and BMW have both warned a no-deal Brexit threatens 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.

Separately, the head of Toyota’s European operations said a negative outcome could put future investment at its UK factory near Derby at risk.

Johan van Zyl told the BBC that if the Brexit “hurdles” are too high it would undermine Toyota’s competitiveness.

Speaking to Sky News, BMW board member Peter Schwarzenbauer said 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 added.

Asked if BMW could move Mini production out of Cowley near Oxford, he said: “We at least have to consider it.”

Earlier, 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.

He said the company had “reserved some air flight capacity for the transportation of bigger materials” and had prepared its suppliers. “The logistics network is very flexible to adjust to changes,” he said.

The warnings come after Japanese rivals Nissan and Honda both recently dealt major blows to the UK motor industry.

Last month, Nissan reversed a decision to build a new car in the UK, and Honda said it was closing its Swindon plant, although both cited non-Brexit reasons.

The motor industry has become increasingly outspoken on the consequences of a no-deal as the 29 March approaches. Aston Martin’s chief executive Andy Palmer this week warned of “a bloodbath” for the industry.

Ford warned that leaving without a deal would be “catastrophic” and the body that represents the UK motor industry, the SMMT said investment had already been hit.

Like many other car industry executives, Mr van Zyl said it was vital that there was frictionless trade with the European Union.

Speaking at the Geneva Motor Show, he said: “We want a regulatory framework between the UK and EU which is the same. We hope still that that can be the outcome.”

But he admitted that, with just over three weeks before the UK is due to leave the EU, “we thought that by now we would have had a decision already about what is going to happen”.

He said Toyota would overcome any short-term problems at its Burnaston car plant near Derby, such as logistics, caused by leaving without a deal. But preparation for no-deal has been costly, he said, and in the long term things could be “very difficult”.

Could work at Burnaston dry up after the current production cycle comes to an end? “The long term effect could be that if it [Brexit] is very negative, that outcome is possible.”

Constantly improving competitiveness is vital, he said, adding: “But if the hurdles are becoming so high that you cannot achieve it then of course you can’t avoid it [hitting investment].”

The Brexit uncertainty comes after a £240m investment in a new Corolla and the ramping up of production at Burnaston.

“It’s critical that we don’t have any disruptions in the production process,” Mr van Zyl said. “So the next week or two is going to be critical.”

 

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