Volkswagen Group CEO Herbert Diess said a no-deal Brexit might mean the automaker’s UK-based Bentley brand would need to plan new investments in other countries.
Asked in an interview with German broadcaster n-tv whether VW would relocate Bentley production if there was a hard Brexit, Diess said that would not be possible on a larger scale in the short term. “But the threat would rather kick in if Bentley were to lose big markets due to isolation,” Diess said, adding it would then perhaps be necessary to plan new investments in other countries.
Diess said it might be necessary to make small adjustments to deliveries of Bentley bodyshells to the automaker’s factory in Crewe, England. VW Group’s factory in Bratislava, Slovakia, currently produces floor platforms and axles for Bentley.
Last week, Bentley CEO Adrian Hallmark said the UK leaving the EU without a trade deal in place “would be bad” — but still preferable to the current uncertainty about the country’s future after Brexit,
“I am not advocating a no-deal. No deal is a bad idea, but at least we would know we are in a crisis,” Hallmark told Automotive News Europe at the sidelines of the Geneva auto show. “At the moment we are in kind of death-row limbo zone of not knowing we are in a crisis or not.”
Hallmark said Bentley is waiting to enact plans that would double the automaker’s production capacity in Crewe. The uncertainty was “forcing companies like us to hold off decisions,” he said.
Bentley will remain in the UK whatever the Brexit outcome, Hallmark said. It is in a different situation to more mainstream automakers with UK production because its heritage is so deeply rooted in the country, he said.
Britain leaving the EU with no-deal would see the country reverting to World Trade Organization tariff rules, meaning Bentley cars would attract a 10 percent duty on finished cars imported into the EU and between 2.5 percent to 4.5 percent tariffs on parts exported from the EU into the UK.
Hallmark said the company would either pass the price increase onto the customer, absorb it to the detriment of profitability or blend the two. “That can vary by model too,” he said.
Bentley’s “worst nightmare” was an extension to Brexit that continued the horse-trading with no likelihood of agreement, a situation he described as “five years of purgatory.”
“We would just come to another cliff edge at the end of the process,” he said. “No deal is not a good option, but not knowing where you stand is debilitating.”
Bentley swung to a 288 million euros loss last year from 55 million profit in 2017. Its sales revenue fell 16 percent to 1.5 billion euros.
The brand’s results were impacted mainly by delays in the start-up of the new Continental GT and restructuring of the pension fund as well as exchange rate effects, VW Group said on Tuesday.
VW’s Diess said on Tuesday that a no-deal Brexit would hurt the group’s other brands. Britain is an important export market for the VW, Audi, Skoda and Porsche brands, he said, while Bentley brand also depended on access to the EU markets.
Diess said he still believed that the UK and the European Union would strike an agreement to prevent a no-deal scenario as Prime Minister Theresa May faces a crucial vote at home.
“We assume that some sort of agreement will be reached to prevent a no-deal Brexit from happening,” Diess said at VW Group’s annual results press conference on Tuesday.
Reuters contributed to this report