BIRMINGHAM, England -- Two German heads of iconic English car brands urged the UK to remain in the European Union in the interest of both sides during the Automotive News Europe Congress here. The pro-EU sentiment was also expressed by the CEOs of Aston Martin and Volvo during the event.
"I would not be very happy if Britain exited the EU. It would be bad for both sides," said Peter Schwarzenbauer, BMW Group’s management board member responsible for the Mini and Rolls-Royce brands.
Ralf Speth, chief executive of Tata Motors' UK-based subsidiary, Jaguar Land Rover, told Automotive News Europe that 20 percent of JLR’s cars are sold in continental Europe, but it also imports a lot of content from there.
“We are very interested in having a free exchange of goods and technology so we can prosper together,” Speth said in an interview after his keynote speech at the event.
For major automakers with global manufacturing footprints and billions of dollars worth of cars and parts moving back and forth across international borders, an exit would mean the loss of free flow of goods between one of Europe’s largest economies and the remaining countries in the European Union.
According to the latest statistics from the UK and German auto industry associations, both countries export more than 77 percent of all cars produced locally, although no figures were available specifically for trading between the two. The UK does run a sizable trade deficit with the EU, however. In the three months to April 2015, it widened by 200 million pounds to 21.3 billion pounds (about $33 billion).
Volvo CEO Hakan Samuelsson said executives might be dwelling too much on short-term aspects like trade flows rather than seeing a unified EU as a necessary counterweight to trading blocs both in the West and East. “I believe we need a strong Europe in the global competition against Asia-Pacific and the U.S.,” he said. “A lot of things are being discussed regarding the future of Europe such as the taxes we will have and what type of labor laws [we will have]. I think it’s good to have the UK point of view included in these discussions."
The UK opted out of the using the euro, preferring to retain its pound sterling. Years of observing the euro zone muddle through its debt crisis only served to strengthen the deep misgivings over the European project and galvanize support for the isolationist UK Independence Party at the expense of the conservative Tory party.
To shore up fringe factions within his EU-sceptic Tory base, UK Prime Minister David Cameron promised to put the issue of an exit to a popular vote in the UK if re-elected as head of the government. He later surprised pollsters with an emphatic and resounding election victory for the conservatives early last month, raising the specter of a troubled Europe slowly fragmenting into pieces.
Germany’s carmakers immediately responded to the outcome, with the head of the VDA auto industry group, Matthias Wissmann, warning the next day the risks from the feared UK exit from the EU far surpassed those of Greece’s potential exit from the bloc.
“As important as it is for the European Commission to tackle the ‘Greek issues,’ it is much more crucial to the future of Europe that Great Britain remains in the European Union in the long term,” Wissmann said following Cameron’s victory. “Now the European Commission and the German government must do everything they can to keep Britain in the European Union.”
Volvo’s Samuelsson, who hails from Sweden, which also doesn’t use the euro, agreed with the risks seen by Wissmann: “If we save the euro by sacrificing Europe I think it would be a very bad move.”
Moreover, London’s Center for European Reform (CER) argues it is not just the UK’s EU trade that is on the line. Were the UK to exit, the think tank says the country would not inherit access to a plethora of EU bilateral trade agreements with third-party countries, and would have to negotiate new treaties from scratch.
Cameron himself wants the UK to remain in the EU, pledging rather to extract more concessions for the country in talks with Brussels. He was forced, however, to backtrack from a threat to fire cabinet ministers that campaigned actively against Europe.
Germany in particular is concerned about an exit. Not only does it views the UK strategically as a natural partner to limit the influence of Club Med countries in the south, the UK imports more goods from Germany than any other country. As a result the UK had a trade deficit with Germany amounting to 5.1 billion pounds in April alone.
Following a meeting between Cameron and German Chancellor Angela Merkel late last month, CER Director Charles Grant wrote that Berlin is keen to help attempts to reform the EU, but it won’t budge on core EU principles. “The Germans fear that British ministers may adopt the blunt, win-or-lose negotiating style that prevails in Westminster [parliament] but not in the consensus-seeking EU, and thereby lose potential allies. The biggest concern in Berlin is that many of Britain’s demands may be impossible to satisfy."
Aston Martin CEO Andy Palmer, a native of England’s Midlands region near Birmingham, reminded Congress attendees this week that isolationism ran counter to the UK’s commercial seafaring roots. Beyond the EU's significance to the economy, however, Palmer refrained from voicing anything but tepid support.
“Britain is historically a trading nation,” he said. “What we originally bought into was a free trade zone (…) and I believe the majority of businesses in the UK, and maybe the majority of the people, believe in that free trade zone. Now all of the things that are associated beyond that with the EU is for the politicians to sort out.”
Douglas A. Bolduc and Nick Gibbs contributed