Carmakers in Britain have triggered some Brexit contingency plans, such as certifying models in the EU, and are working on revised production schedules and stockpiling more parts should Brexit result in less than the free trade they seek.
According to a special Reuters report, the moves are aimed at ensuring plants, which rely JIT/JIS delivery of components, can keep operating after Brexit on 29 March but will add costs and bureaucracy which could risk their long-term viability.
The report said McLaren Automotive was looking at having its cars certified by both a British and an EU agency to smooth sales. It is also planning to stockpile critical components and change shipments into the EU around Brexit if there is disruption.
“I will sell a little more in January and February and plan to pick the volume up in May and give us a leaner period through the change point,” chief executive Mike Flewitt told Reuters.
BMW has already said it would move the annual summer shutdown of its Mini plant next year to April and, a spokesman told the news agency, is looking for lorry parking areas and warehousing on both sides of the channel and seeking to sign contracts to lease certain locations.
It is also investing in IT systems to handle any new red tape as carmakers estimate tens of thousands of new documents could be needed if tariffs and customs are imposed.
The German carmaker’s Brexit plans are costing millions of pounds, a source familiar with the matter told Reuters.
Honda Europe boss Ian Howells told Reuters it is not in the market to buy “huge amounts of warehousing space”. “It’s been a very precise calculation or estimation of what components need to be brought in,” he said, adding the firm could also alter its output to sell more into the EU at the start of next year.
Executives told Reuters many British carmakers have also asked suppliers to look into how they would handle delays at ports.
UK negotiators have cited the car industry as an example of where the EU would lose out if there are new barriers to trade, a source told Reuters, particularly due to the high volumes of German cars sold in Britain. German carmakers have also pushed their government to maintain the status quo on uninhibited trade, the source said.
Reuters noted 85% of cars sold in Britain are imported, topped by Volkswagen which only final assembles Bentley in Britain. Despite bring top brand overall, Ford builds engines but no cars, having gradually shifted production out of the UK to Germany and Turkey.
The news agency noted a transitional deal is meant to come into force after Brexit ensuring little changes until the end of 2020 but that would not happen if talks break down, meaning firms are having to plan for all contingencies.
Jaguar Land Rover remains undecided.
“We are planning for different scenarios whilst keeping our options open,” a spokeswoman told Reuters.
“No final decisions have been taken at this stage.”
JLR is opening a EUR1.4bn factory in Slovakia for which it had been offered a EUR125m EU subsidy which was subsequently scrutinised by the European competition commissioner.
Prime Minister Theresa May has repeatedly said she will secure a good deal for the sector.
Reuters noted executives also risk spending millions of pounds on strategies which in the end are not needed if Britain maintains free and unfettered trade.
“What you don’t want to do is go spend a fortune and then find it’s actually a complete waste of time,” Flewitt said.