Automotive

BMW Warns Pulling Back on UK Investment

German automaker BMW AG joined other businesses of warning of pulling back on investment in the U.K. if a Brexit deal isn’t reached.

The automaker joined a rising chorus of businesses warning they will have to pull back on their U.K. investment if there is no Brexit deal, which would ensure goods can flow freely to the European Union.

“The ongoing uncertainty surrounding the Brexit negotiations is not helpful when it comes to making long-term business decisions,” Munich-based BMW said Monday in a statement. “In particular, the lack of clarity surrounding future customs arrangements remains a cause for concern.”

BMW U.K. Production

The comments, which have been carefully worded, were issued in response to an interview with the company’s manager, Stephan Freismuth.

His language was blunter, saying the carmaker would be forced to rethink production as its four U.K. plants if products are stopped at the border.

In that scenario, “then we cannot produce our products in the U.K.,” he told the newspaper.

The U.K.’s motor industry is already feeling the pinch from uncertainty, with investment halving in the first six months to 347 million pounds ($461 million), Michael Hawes, head of the Society for Motor Manufacturers and Traders, said in an interview. His members are “waiting as long as possible to make future commitments.”

The industry risks “death by a thousand cuts” if Britain exits with no deal, as the nation’s plants gradually become less competitive, making it more difficult to win contracts for new models, Hawes said.

BWorldFinance - BMW car

Reliability Issues

BMW emphasized in its statement that the company is still committed to its four U.K. plants, which produce Mini and Rolls-Royce cars, along with BMW engines and body parts.

However, the warning – following a similar outburst by European planemaker Airbus SE last week – suggests businesses are becoming more outspoken, with a deadline looming early next year as they wait for a Brexit deal to take shape.

 “The automotive industry is a global one, with parts and finished products needing to move as freely as possible between markets, in order to facilitate just-in-time production,” BMW said.

 “Clearly if parts cannot physically get to a factory at the expected time, that factory will not run as smoothly and reliably as is desirable.”

The key issue for manufacturers is being able to move parts in and out of the EU without extra steps, delays or costs. That would allow their modern production systems to continue unrestricted, in which components frequently cross borders during manufacturing.

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