Costas Pitas -
Carmakers in Britain have triggered some Brexit contingency plans such as certifying models in Europe and are working on redrawing production schedules and stockpiling more parts to defend against any loss of unfettered trade after Brexit.
Such moves would allow plants, which rely on the just-in-time delivery of tens of thousands of components, to keep operating after Brexit on March 29 but would adds costs and bureaucracy which could risk their long-term viability.
London and Brussels hope to agree a deal by the end of the year to avoid tariffs and trade barriers but Prime Minister Theresa May’s proposals have been criticised by both Brexiteers, who want a cleaner break from the bloc, and the European Union.
McLaren Automotive, which builds around 5,000 cars a year at its English factory, is looking at having its cars certified by both a British and European agency, is planning to stockpile critical components and change when it sells into the EU if there is disruption.
“I will sell a little more in January and February and plan to pick the volume up in May and give us a leaner period through the change point,” Chief Executive Mike Flewitt said.
BMW, which said last week it would move the annual summer-time shutdown of its British Mini plant to April, is looking for lorry parking areas and warehousing on both sides of the channel and is seeking to sign contracts to lease certain locations, a spokesman said.
It is also investing in IT systems to handle any new red tape as carmakers estimate tens of thousands of new documents could be needed if tariffs and customs are imposed.
The German carmaker’s Brexit plans are costing millions of pounds, a source said.
But Honda, which builds 10 per cent of Britain’s 1.6 million cars at its Swindon plant, is not in the market to buy “huge amounts of warehousing space”, its Europe boss Ian Howells said.
“It’s been a very precise calculation or estimation of what components need to be brought in,” he said, adding the firm could also alter its output to sell more into Europe at the start of next year.
Many carmakers have also asked suppliers to look into how they would handle delays at ports, executives said, as thousands of parts, engines and finished models move between Britain and the continent every day.
British negotiators have cited the car industry as an example of where the European Union would lose out if there are new barriers to trade, a source said, particularly due to the high volumes of German cars sold in Britain.
Britain’s Brexit ministry did not reply to a request for comment.
Whilst companies with factories in Britain face uncertainty over their production sites, so do major automakers which do not build any vehicles in Britain, not knowing how their access to Europe’s second-biggest autos market might change. Over 85 per cent of cars sold in Britain are imported with Germany’s Volkswagen group, which only has a plant building Bentley models, being the top seller.
Ford, which builds engines but no cars in Britain, is the biggest-selling brand in the country. — Reuters
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