BMW mulls moving iconically British Mini amid Brexit talks

BMW AG hinted it may shift production of the quintessentially English Mini car to mainland Europe, a harbinger of the cultural tremors that may follow Brexit’s economic fallout.

The German automaker is preparing for “different scenarios” in response to the U.K.’s planned exit from the European Union, and has the leeway to move output elsewhere if necessary, according to a statement yesterday. While most Minis are made in Oxford, England, some of the urban brand’s models are already produced in the Netherlands and other facilities could also handle assembly.

“Our production network offers us flexibility,” CEO Harald Krueger said at BMW’s annual press conference in Munich. Nevertheless, “the U.K. remains an important location for us. Much will depend on how Brexit is ultimately negotiated.”

Carmakers are concerned that Brexit may lead to costly trade barriers, hampering the free movement of components and vehicles between production sites and end consumers across Europe. Production of the Mini could move to BMW’s plant in Born, Netherlands, where some versions are already being made, or to Leipzig, Germany, where 1-Series compact autos are rolled out based on a similar platform.

BMW has owned Mini and its other iconic British brand, Rolls-
Royce, for about two decades. In addition to the Oxford site it also has facilities in Goodwood and Hams Hall. The Munich-based manufacturer employs about 18,000 across the U.K. and exports about 2.4 billion pounds (USD3 billion) of vehicles and parts from the country.

While it’s too early to change operations there since Brexit terms are still being negotiated, the company is hoping for “a tariff-free environment and a legal equilibrium,” BMW’s head of sales Ian Robertson said at the press conference.

The Brexit comments come as the German carmaker’s overseas operations become increasingly vulnerable to a possible clampdown on free trade. U.S. President Donald Trump criticized BMW for planning to make cars at a $1 billion factory it’s building in central Mexico, and threatened the automaker with a 35 percent duty on its imports to the U.S.

Despite these threats, BMW is pushing ahead with plans to roll out 3-Series models at the San Luis Potosi plant starting in 2019, Chief Financial Officer Nicolas Peter said at the event. Construction at the site is “proceeding according to plan,” he said.

Krueger was among the German business leaders who accompanied Chancellor Angela Merkel during her first visit with Trump at the White House last week. During the meeting, Trump reprised his complaints that the U.S. had been treated “very, very unfairly” by its German trade partners and poured loaded praise over European officials for besting their American counterparts.

BMW has sought to defuse conflict with Trump by noting that it also has a factory in the U.S., its biggest worldwide, and that the new site in Mexico will make vehicles for global customers and not just Americans.

“The meeting with President Trump was a great opportunity to show BMW’s commitment and activities in the U.S.,” Krueger said, noting that Trump was particularly impressed by the company’s apprenticeship program. The CEO said they discussed the importance of free trade to maintaining BMW’s exports from the U.S., and described the encounter as “successful all-round.”

The German luxury brand plans to increase capacity at its site in Spartanburg, South Carolina, which makes X Series sport utility vehicles, to 450,000 annually from 410,000 currently. BMW has said it’s the largest exporter on a net basis from the U.S., with goods worth $10 billion per year, and that it helps support 70,000 jobs in the country.

“The U.S. is our second home, and I told the President that too,” Krueger said. Dalia Fahmy, Elisabeth Behrmann, Bloomberg