Exclusive: Bentley warns worst case no deal Brexit would hit profitability, investment
LONDON (Reuters) – The boss of carmaker Bentley said failure to reach a Brexit deal would be “quite damaging” to annual profit in the worst case scenario, limit the company’s ability to invest and could lead to its plant closing for an additional few days.
A worker constructs a Bentley Continental GT on the prodution line at the luxury automaker’s manufacturing facility in Crewe, Britain October 15, 2018. REUTERS/Darren Staples
Chief Executive Adrian Hallmark told Reuters the firm was already preparing by building up some stocks and switching from the port of Dover to Immingham to bring in certain parts with more contingencies to be enacted from December if needed.
Like the rest of the sector, the Volkswagen-owned brand, which builds roughly 11,000 vehicles at a northern English plant in Crewe, is worried about duties and 10 percent tariffs under World Trade Organization terms.
“Best case, it’s an annoying impact on our annual profitability,” Hallmark told Reuters. “Worst case, it’s quite damaging on our annual profitability so a full no deal Brexit would hurt us as a company, it would limit ability to invest.”
London and Brussels hope to strike a Brexit agreement next month but Hallmark said if there was no deal by the end of the year, the automaker would have to consider stockpiling more and closing its plant for a few extra days to handle any disruption.
“We may work for four days, or we may have a longer Christmas break and a longer Easter break if there is no deal so that we can smooth the period between now and the middle of next year,” he said.
Britain’s overwhelmingly foreign-owned automotive industry employs more than 850,000 people and has been vocal about the benefits of keeping free and unfettered trade as thousands of cars, engines and parts move to and from the continent daily.
The country’s largest carmaker Jaguar Land Rover has warned that the wrong Brexit deal could cost it 1.2 billion pounds ($ 1.5 billion) per year whilst Mini has moved its annual shutdown to April, just after Britain leaves the bloc.
Aston Martin is even considering flying in car components if there are snarl-ups on motorways to and from Dover, prompting many, including Bentley, to consider other ports to help avoid delays.
Prime Minister Theresa May has repeatedly said she will get a good deal for the industry with her Chequers plan, which has faced stiff opposition from many in her party, promising a common rulebook for goods with the EU to avoid disruption.
Whilst having to adapt to the uncertainties around Brexit, car firms are also preparing to provide electric and hybrid models as stricter air quality rules come into place and governments increasingly penalize the use of combustion engines.
Hallmark, who took over as chief executive in February, is trying to make the brand’s range more environmentally-friendly and presented his plan to the board earlier this year.
“It was taking stock of all the models, all the powertrains, all the future technologies that we needed to invest in and re-cut the plan to be more electrified than we were,” he said.
Bentley expects to near a record 11,089 sales this year despite having faced delays to the arrival of its Continental GT model and the challenge of re-certifying some vehicles due to stricter emissions rules.
It posted an 80 million-euro loss in the first six months of the year and will remain in the red for its full-year performance, Hallmark said.
Slideshow (10 Images)
It also faces a decision within about a year over developing its first pure-electric vehicle which it hopes could be available by mid way through the next decade.
“When is the first full-electric Bentley? That is currently in the decision process but our target is definitely before 2025.”
($ 1 = 0.7828 pounds)
Reporting by Costas Pitas; Editing by Guy Faulconbridge and Edmund Blair