October 2, 2018 / 9:26 AM / 2 months ago

BMW would up Dutch production in hard Brexit scenario: CEO

PARIS (Reuters) - German carmaker BMW (BMWG.DE) sees a 50:50 chance of Britain leaving the European Union without a trade agreement, which would force it to shift more production of Mini vehicles to the Netherlands, Chief Executive Harald Krueger said on Tuesday.

Harald Krueger member of the board of Management of BMW AG poses for a picture during the first press day of the Paris auto show, in Paris, France, October 2, 2018. REUTERS/Benoit Tessier

“I told (UK Prime Minister Theresa May and the European Union that if there is a hard Brexit, both sides are losers. We will no longer fulfill trade agreements and then we are forced to build the car in the Netherlands,” Krueger told journalists at the Paris Motor Show.

“Hard Brexit is currently not our main scenario but we are preparing for it. We see a 50:50 chance.”

BMW currently builds most of its Mini vehicles at a plant in Oxford, southern England, but relies heavily on components imported from BMW’s German plants. Oxford made about 60 percent of the 378,486 Minis produced last year.

If Britain tumbled out of the EU without a deal on March 29, Oxford’s status as the main global exporting hub for Mini would be put at risk, Krueger said.

When asked whether a hard Brexit would make the Netherlands the main exporting hub for supplying customers in the European Union, Krueger said: “Yes.”

BMW has quietly built up Netherlands-based contract manufacturer VDL Nedcar as a new export base for its Mini brand.

At VDL Nedcar, staffing levels have jumped to about 7,200, from around 4,500 last year and 1,450 in 2014.

By contrast, staffing levels at BMW’s British plant have remained relatively stable over the same period, with just over 4,500 people working on building Minis in Oxford.

Sales in Britain have already suffered amid the uncertainty over the future, Krueger said.

BMW Group as a whole continued to see double-digit sales growth in China in August and September, despite increased geopolitical tensions between China and the United States.

Europe remains a difficult market where demand has been distorted by manufacturers flooding showrooms with cars before the onset of stricter emissions standards, known as the WLTP rules.

“European sales are not being driven by market demand, but by WLTP distortions. These will last between six and nine months,” Krueger said.

Reporting by Edward Taylor; Editing by Maria Sheahan and Mark Potter

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