German high-end carmaker BMW issued a veiled warning on Thursday that a bad Brexit deal could see Mini production leave Britain, calling for "pragmatism" from London and Brussels in EU exit talks. "We hope for pragmatism from all parties in the Brexit negotiations. That means no new barriers to trade. Free movement for skilled workers," BMW chief executive Harald Krueger told investors at the Munich firm's annual general meeting.
"Here, we are planning in terms of scenarios. You know that we make Mini models at VDL Nedcar in the Netherlands. We're flexible," he added, in what appeared to be a hint that production of the landmark British brand could quit the island nation. BMW employs around 18,000 people in the United Kingdom, and claims that its presence supports a further 46,000 workers.
Its Oxford plant produces a variety of Mini models, while a factory in Hams Hall outside Birmingham builds engines and a Swindon works makes body panels and some sub-assemblies. BMW has yet to decide whether to build a new all-electric Mini in Oxford, and has refused to confirm or deny press reports that the model will be produced in Germany or the Netherlands instead due to Brexit uncertainty.
The group also owns legendary luxury manufacturer Rolls-Royce Motor Cars, based in Goodwood. Car producers have become emblematic of the difficulties Britain will face in extricating itself from the 28-nation European Union after a close-run referendum last June.
Nissan CEO Carlos Ghosn in October gave the green light to new investments at its plant in Sunderland, northeast England, after receiving private guarantees from London over Brexit fallout. Around 56 percent of the 1.7 million cars made in the UK in 2016 were exported to the European Union, and the country also imports large numbers of vehicles manufactured in France, Germany and Spain.
Meanwhile, complex supply chains mean car parts and sub-assemblies can cross national borders multiple times for different production processes before a final vehicle is assembled. Brexit supporters have argued that the sheer complexity and the massive potential impact of new barriers to trade will make continental industry lobbies pressure their governments to strike a favourable deal with Britain.
That has so far not been true of Germany's powerful carmakers, whether in statements from the influential VDA industry federation or from individual firms. "Most of our customers are here in Europe. It's always been clear to us: we support the European community. We support the internal market. That's our conviction. We benefit from Europe and the euro," BMW chief Krueger said Thursday. Britain is set to definitively quit the EU in March 2019, after a two-year negotiating period triggered earlier this year by Prime Minister Theresa May.