BMW plans to make the new Electric Mini in Oxford. This fully electric vehicle will be manufactured in luxury car maker’s Cowley Plant. The company stated that the car would go into making in 2019. However, the primary location for the Electric Mini will remain Oxford.
No Brexit Assurances Before Manufacturing of Electric Mini
BMW statement said that the company did not get any assurances from the government relating to Brexit. The company specifically mentioned the trading agreements linked to UK’s exit. The British government is already facing tough questions about support & assurances given to Nissan. Nissan will make the new models of X-Trail and Qashqai in the UK. Furthermore, the British government has sent a letter to Toyota, giving reassurances relating to post-Brexit arrangements.
BMW Wary of Brexit
The luxury automaker has indicated its concerns because of Brexit by building a plant in Netherlands. Although, previously 60% of the total Minis were made in Oxford. Since Brexit changes so much for businesses, the automaker wants to remain flexible in its approach.
Greg Clark, the British Secretary, took BMW’s announcement as a vote of confidence. The government plans to make the UK the best place in the world for making technologically advanced vehicles. The British government also intends to invest into development of batteries in the United Kingdom.
BMW has already had meetings during the last few months with government officials. However, the luxury car makers’ staying in or going out of the UK does not reflect on Brexit’s impacts on the auto industry. The trade barriers imposed on the countries will decide how the auto industry responds. It means the real impact will become apparent with the manufacturing of new models.
Electric Mini a Lot Similar to Previous Models
The company will not be making an entirely new car. Instead, the Electric Mini will have the same design. Different parts of the car including battery pack, gearbox, and the motor will come from Germany. Therefore, for the car maker, it would make ideal sense to have the car built at the same plant. It also implies that the company does not need to make massive investments on the assembly line.
Brexit Could Cause Increase in Costs
There are fears that the car’s cost of manufacturing after Brexit will increase. The car will get imported back to the countries from where the parts came in the first place. The company did not ask for any special deals or assurances as per its latest statement. Furthermore, it will decide about the manufacturing of cars in the future based on “economic realities.”
The Job Creation
BMW employees around 18,000 employees in the United Kingdom including staff at Rolls Royce Factory in Sussex, Mini Plant in Cowley, and other facilities in Swindon and Birmingham. Therefore, the decision to stay in the UK will also have a great impact on thousands of jobs.
Brexit and Auto Industry
The auto industry in Great Britain is enormous regarding economic contributions. The industry generates around £72bn each year. Above 50% of all cars come out of assembly lines in the UK go to EU countries. An estimated 12% of country’s exports belong to the automotive industry.
If there is no favorable tax deal with the EU, it will badly impact the car makers. A failure to agree on favorable trade terms will result in the addition of 10 percent extra levy. Similarly, Britain’s exit from the European Union will also add costs of around £1,500 to each car imported from other countries. On average, cars only have 30% of the components made in the UK. Rest of the 70% come from other nations.
The current Customs Regulations make it easy for the parts to move into and out of the UK without a problem. However, in the case of an unfavorable deal, there would be a massive impact on this movement.
The job market will have a massive impact if the car industry gets a hit. An estimated 170,000 are direct employees of the automotive industry. Similarly, more than 600,000 positions are indirectly created because of the sector itself.
Although Britain had record car sales in 2016, but then Brexit did not happen. So a favorable trade deal is must for all industries including the auto sector.