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March 21, 2017

BMW chief’s Trump meeting goes well, Brexit a wait-and-see

The meeting between BMW's management board chairman and US president Donald Trump "went well", Harald Kruger told the annual accounts press conference here in Munich today. Meanwhile, the pending triggering of Brexit by the UK is a wait-and-see for now.

The meeting between BMW’s management board chairman and US president Donald Trump “went well”, Harald Kruger told the annual accounts press conference here in Munich today. Meanwhile, the pending triggering of Brexit by the UK is a wait-and-see for now.

Kruger said the president was very interested in BMW’s programmes for further education and training. The automaker has recently spent EUR200m on new training and development programmes, putting 14,000 executives alone through Strategy Number One>Next courses, and has transferred some programmes to the US with success.

“The president was very interesting in our training systems and we took employees along with us to explain how they work,” Kruger said. These included workers from the Spartanburg plant and German suppliers such as Schaeffler and Siemens.

“Training can enhance competitiveness,” Kruger said.

He told the president the company employed 9,000 auto workers in the US and that most of the Spartanburg plant’s output – 70% – was exported. For every job created in the plant, BMW claims 10 are created in the “wider infrastructure” – supply chain and support services – both within the state of South Carolina and beyond. The factory’s next new model is the luxury X7 SUV.

As far as the new plant being developed in Mexico was concerned, “our planning is continuing as it always had”.

The plant, in San Luis Potosi, is due to roll off its first 3 Series cars for export in 2019 and will also compensate for a reallocation at the South African factory which replace current 3 Series sedan output with the X3.

Kruger said, without elaborating, he did not raise the question of Trump’s suggested 35% border tax on vehicles imported from Mexico. Instead he told the president free trade was a “precondition” so BMW could export from Spartanburg.

On the US market itself, sales and marketing chief Ian Robertson said the market was shifting more towards SAVs (SUVs and crossovers) but sedans such as the redesigned 5 Series, being launched now, were still important.

“We don’t expect much upward shift” in the overall market this year, Robertson said, but he expected planned new models would help BMW’s segment share. New models will include a redesigned X3, and new segment entries at the bottom and top end, the X2 and X7.

Separately, on Brexit, which the UK is expected to ‘trigger’ formally on 29 March, BMW is adopting a ‘wait and see’ approach, Robertson said.

“There are up to two years of negotiation to come and it’s far too early to say how it will turn out,” Robertson told media.

BMW had made clear it hoped for a “tariff-free environment” following Brexit and a “legislative equilibrium” beyond the final triggering of Article 50.

Until the post-Brexit environment was clear, it was “business as usual at BMW,” Robertson said.

He has previously told just-auto he would like free movement of labour to continue – the group’s Rolls-Royce factory in Goodwood, southern England, employs Poles, trained in fine furniture manufacture, to make the wood trim panels fitted in many cars. Many employees at the Mini plant in Oxford are also from Europe.

The UK is the BMW brand’s fourth largest market and accounted for 250,000 sales in 2016.

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