Automakers in Britain have sparked some Brexit contingency plans like certifying models in Europe and are now working on redrawing production schedules and stockpiling more parts to defend against any loss of unfettered trade following Brexit.
Such moves would enable plants, which rely on the just-in-time delivery of tens of thousands of components, to continue operating following the Brexit on March 29. However, it would add costs and bureaucracy that could risk their long term viability.
London and Brussels hope to agree a deal by the end of the year to sidestep tariffs and trade barriers, although Prime Minister Theresa May’s proposal have been criticized by the European Union and Brexiteers, who demand a cleaner break from the union.
McLaren Automotive, which manufactures around 5,000 cars per year at its English factory, is considering having its cars certified by both a British and European agency. It is also planning on stockpiling critical components and change when it sells into the European Union if there is some 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 said.
BMW, which stated during the previous week that it would move the annual summer-time shutdown of its British Mini plant to April, is considering lorry parking areas and warehousing on both sides of the channel and is aiming to sign contracts to lease certain locations, a spokesman said.
It is also investing in IT systems to handle any new red tape as carmakers forecast tens of thousands of new documents could be necessary if tariffs and customs are imposed .
The German carmaker’s brexit plans are amounting to millions of pounds, according to a person familiar with the matter.
However, Honda, which manufactures 10 percent of Britain’s 1.6 million cars at its Swindon plant, is not in the market to buy “huge amounts of warehousing space,” said Ian Howells, who is its Europe leader.
“It’s been a very precise calculation or estimation of what components need to be brought in,” he stated. He added that the firm could also change its output to sell more into Europe at the beginning of the next year.
A huge number of automakers have also asked suppliers to look into the way they would handle delay at ports, executives said, since thousands of parts, engines, and finished models move between Britain and the continent on a daily basis.
British negotiators have cited the car industry as an example of where the European Union would probably lose out should any new barriers to trade appear, according to a source with knowledge of the matter. This was particularly because of the high volume of German cars sold in Britain.
Britain’s Brexit ministry did not provide any answers to requests for comments.