Bentley CEO Adrian Hallmark discussed the automaker's closer cooperation with sibling Volkswagen Group brands Audi and Porsche and the UK automaker's preparations for a no-deal Brexit in an interview with Automobilwoche, a German-language sister publication of Automotive News Europe.
Bentley had a good 2019 and you were confident about this year. How has it been so far?
It's been a rollercoaster ride for us as it has for everyone. The first quarter was the best in the company's 100-year history, despite the initial impact of COVID-19 from mid-March. The second quarter was also a record, but a record loss. It then recovered significantly in the third quarter. When we look at the rest of the year, we are in pretty good shape.
Will you be back in the black this year?
At the end of October things looked really good. And we can still make it. But that is not certain. Everything now depends on what happens with the second lockdown from November and how we manage to deliver the cars we have in stock. But I am certain that we are still on track to break even for the year as a whole, despite the heavy loss in the first half and a disastrous second quarter. If everything goes to plan, we should be able to make up the loss from the first half, but that depends crucially on trouble-free production and logistics by the end of the year.
And 2021? It is possible there will be a hard Brexit with no UK-EU trade deal at the end of 2020.
It is clear that a hard Brexit would hit us. We buy from the EU many of the components that we use in our Crewe [England] plant. Europe is also an important sales market for us. If there are delays at the border or customs duties, we will feel the effects very clearly.
How are you preparing for this?
We started expanding our inventories at an early stage. We are hoarding like squirrels before winter. Previously we had parts in stock for two days, but now we have expanded that to between five and ten days. This ties up a lot of liquidity because we keep more parts in stock and it costs us a lot of money. But it is always cheaper than stopping production. The most important thing is that we keep production running. We have replenished the stocks so that even if we have problems with supplies because of Brexit, we can continue production for two weeks without stopping the factory.
Would it not be an option to move production to the EU, for example to Germany?
No. Our models are far too different from those of the other [VW] group brands for that. Our cycle time in Crewe is three times longer than that of the Porsche Panamera in Leipzig, for example. Not because we are lazy or slow, but because the entire production process is set up differently here. Bentley Motors has a low-volume production with a lot of manual work. If we were to have the same vehicles built at Porsche in Leipzig, capacity there would immediately be reduced by two thirds. And building a new factory just for us would not pay off. That is not an option.