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BMW Reviewing UK Plant Options Post-Brexit Amid Trade Threats

March 21, 2017
BMW Chief Executive Officer Harald Krueger: “The UK remains an important location for us. Much will depend on how Brexit is ultimately negotiated.” 

BMW AG said it’s reviewing its factories in the U.K. ahead of Brexit and that it has the flexibility to move production elsewhere if necessary.

The Munich-based manufacturer, which makes vehicles for its Mini brand in Oxford, Rolls-Royces in Goodwood and engines in Hams Hall, is preparing for “different scenarios” once the U.K. leaves the European Union, BMW (IW 1000/27) Chief Executive Officer Harald Krueger said in remarks prepared for the annual press conference in Munich on Tuesday.

“Our production network offers us flexibility,” Krueger said, noting that Minis are also built at a plant in the Netherlands. That said, “The UK remains an important location for us. Much will depend on how Brexit is ultimately negotiated.”

Carmakers are concerned that the U.K.’s exit from the EU may lead to costly trade barriers, hampering the free movement of components and vehicles between production sites and end consumers across Europe. Production of the Mini could move to BMW’s plant in Born, Netherlands, or to Leipzig, Germany, where 1-Series compact autos are rolled out based on a similar platform.

BMW’s comment on Brexit comes as the German carmaker’s overseas operations become increasingly vulnerable to a possible clampdown on free trade. U.S. President Donald Trump criticized BMW for planning to make cars at a $1 billion factory it’s building in central Mexico, and threatened the automaker with a 35% duty on autos it imports to the U.S.

Despite these threats, BMW is pushing ahead with plans to roll out 3-Series models at the San Luis Potosi plant starting in 2019, Chief Financial Officer Nicolas Peter said at the press conference. Construction at the site is “proceeding according to plan,” he said.

Krueger was among the German business leaders who accompanied Chancellor Angela Merkel during her first encounter with Trump at the White House last week. During the meeting, Trump reprised his complaints that the U.S. had been treated “very, very unfairly” by its German trade partners and poured loaded praise over European officials for besting their American counterparts.

BMW has sought to defuse conflict with Trump by noting that it also has a factory in the U.S., its biggest worldwide, and that the new site in Mexico will make vehicles for global customers and not just Americans.

“The meeting with President Trump was a great opportunity to show BMW’s commitment and activities in the U.S.,” Krueger said, noting that Trump was particularly impressed by the company’s apprenticeship program. The meeting was “successful all-round.”

The German luxury-car maker plans to increase capacity at its site in Spartanburg, S.C., which makes X Series sport utility vehicles, to 450,000 annually from 410,000 currently. BMW has said it’s the largest exporter on a net basis from the U.S., with goods worth $10 billion per year, and that it helps support 70,000 jobs in the country.

By Dalia Fahmy and Elisabeth Behrmann

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