No-Deal Brexit a Concern for Britain’s Luxury Automakers

Bentley Motors and Aston Martin are preparing for the worst as Brexit looms. Prior to and following the British Parliament’s rejection of Brexit deal proposed by Prime Minister Theresa May, the Chief Executive Officers of two leading luxury automotive companies said at the Automotive News World Congress in Detroit that they had been preparing for the disaster. Both the leading automakers have been making strategic approaches to tackle the upcoming supply chains issues.

Andy Palmer, the CEO of Aston Martin said that he has assumed the worst in their plate, and thinks they will be full swept away from Europe, and their supply chain at a broader level will be disturbed badly. Last week, Aston Martin rolled out emergency planning for Brexit, including distribution of car parts through air cargo to be able to use ports besides Dover, which is likely to face the utmost brunt if the government officials reach on no deal.

Volkswagen Group-owned Bentley CEO Adrian Hallmark said at the conference that for more than half-a-year Bentley has been supplying some parts via some other port. Hallmark added that its time he take back his words reading, ‘we are prepared’.

With the final date of Brexit coming closer, Rolls-Royce and Mini worries are accelerating, with their hearts in their hands.

Britain would get the hardest hit if it loses its grip on free trade with European markets as 80 percent of Britain-manufactured vehicles are shipped to the European Union. The stakes are also high for Germany.

In 2016, German manufacturers gained lucrative market form Britain, it being the most lucrative market which saw sales of over 8 lac new cars or accounted to 20% of German manufacturers’ total global exports. German carmakers didn’t export many cars to the U.S. and China, as it already has its factories there.

Following the vote, German auto industry association VDA said that the aftermath of a ‘no deal’ is going to be devastating for them. VDA added that if there would be no proper and feasible solution for business, jobs in the automotive industry, mainly in the British areas will be on the verge of extinction.

While commenting on the dooming scenario, BMW, the owner of Mini and Rolls-Royce, said in an email that the due to the severe ambiguity of EU and UK trade relations, it has to pull up the socks to face the worst.

Low-margin high volume carmakers, including Toyota have a grave concern ahead in the form of tariffs, as the automaker owns a facility in Derby, and Nissan with main business in Sunderland would suffer significantly. With just a single British factory Bentley, VW Group is high frightened as it depends on imports to serve U.K. customers.

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