BMW, Peugeot Wary of Clouded Future If U.K. Votes for `Brexit'by , , and
CEO Krueger appeals to Britons to avoid `regrettable' act
Peugeot says slide in pound would hurt sales, force prices up
A British vote to exit the European Union stands to cloud the future of carmakers in the U.K., as auto executives warned of higher prices and potential trade disruptions.
“I’d find it very regrettable,” said Harald Krueger, chief executive officer of BMW AG, the parent company of the Mini and Rolls-Royce car brands, said in a briefing at the Geneva International Motor Show this week. “What it might mean is hard to tell. BMW has Mini, Rolls-Royce and an engine plant in the U.K. It’s critical that there’d be a trade agreement -- and what sort.”
A clutch of other carmakers also used the Swiss expo to register their concern about a breakup of the EU. The heads of PSA Peugeot Citroen and Vauxhall-parent General Motors Co.’s Opel unit warned of a possible slump in sales and earnings tied to a weakening in the pound. Daimler AG CEO Dieter Zetsche echoed his BMW counterpart in saying a U.K. exit would be “very, very regrettable.”
“Prices will go up to compensate for a weak currency, like in the emerging countries,” Peugeot CEO Carlos Tavares said at the show. “The market as a whole will be impacted.”
Prime Minister David Cameron is seeking to convince voters that a deal struck with EU counterparts warrants staying in the bloc, he’s fighting the emotional appeal of independence with economic rationale. JPMorgan said Tuesday an exit could halve Britain’s growth rate to 1 percent in the year after an “out” decision, and weaken sterling as much as 10 percent.
The U.K. is Europe’s second-biggest car market and the third-biggest producer. Britain is a valued member of the EU as “a driver for market liberalization and other reforms,” BMW’s Krueger said. Oxford-based Mini has been owned since 1994 by BMW, which revived the brand with a new-generation car in 2001, while the German company bought licensing rights to Rolls-Royce in 1998, setting up the ultra-luxury brand in Goodwood, southern England.
A manufacturing presence in the U.K. at least provides a degree of hedging against currency changes, though sterling “still is an issue,” said Opel head Karl-Thomas Neumann.
At Ford Motor Co., which ended vehicle assembly in Britain in 2013 but still employs 14,000 people in the country, with engine and transmission plants there, European chief Jim Farley said an exit after June 23’s vote would be “unprecedented” and that it’s too early to assess the likely consequences.