Mini could shift more production out of UK after hard Brexit

PARIS -- BMW could be forced to shift more Mini production to the Netherlands in the case of a hard Brexit, Group CEO Harald Krueger said.

“We are preparing for hard Brexit, that will be a lose-lose situation (for the UK and the EU),” Krueger said on the sidelines of the Paris auto show on Tuesday. The BMW CEO said that without a free trade agreement with the EU, Mini will be forced to shift more production to the contract manufacturer VDL in the Netherlands. Born-based VDL, formerly known as NedCar, builds the Mini 3-door hatchback and cabriolet, as well as the Countryman compact SUV, according to Automotive News Europe assembly plant map. The brand currently builds the 3- and 5-door Mini hatchback, as well as the Clubman wagon in its own plant in Oxford, England. Oxford made about 60 percent of the 378,486 Minis produced last year. Last month, BMW said it will move its annual maintenance stoppage in Oxford from the summer to April 1, 2019, three days after the UK is slated to leave the EU. Despite the comments, Krueger said Mini will retain production the UK. “The UK is the largest market for Mini, so local production will stay,” he said. BMW too will keep production at the UK’s Hams Hall engine plant, which builds 3- and 4-cylinder gasoline engines for the BMW namesake brand and Mini. Krueger said he does not expect major disruption to Rolls-Royce production at its only factory in Goodwood, England, given its lower production volumes and the lack of just-in-time parts delivery. Separately, Krueger said earlier that he sees a 50:50 chance of the UK leaving the EU without a trade agreement. “Hard Brexit is currently not our main scenario, but we are preparing for it. We see a 50:50 chance,” Krueger said. 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 EU, Krueger said: “Yes.” Dutch alternative 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 automakers 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. Reuters contributed to this report