Brexit causes BMW to shift some engine production to Germany

BMW engine production at Hams Hall

BMW has shifted some of its engine production from its Warwickshire plant at Hams Hall to Germany as part of changes caused by Brexit.

The move was revealed as the manufacturer launched the first electric Mini model at its Cowley plant in Oxfordshire.

BMW X3

The change has been driven by the tax status of vehicles. EU-manufactured engines which are exported to South Africa, where BMW assembles its X3, and re-imported into Europe have favourable tax treatment because of the “local content”.

Post-Brexit, UK-manufactured items would no longer count towards EU’s locally-produced content. That would have the effect of these vehicles losing their tax-free treatment.

Shifting engine production from the UK to Germany means that will not happen.

Its head of production Oliver Zipse – the former head of the Cowley site who is considered the favourite to become BMW’s new chief executive – said: “Hams Hall doesn’t build any South Africa products anymore, which is of course, bad for the UK.”

Although he said the number of engines affected is “not a huge amount” – and Hams Hall production volumes are expected to be stable this year – the impact is a concern for an industry that has already been hit by a number of problems.

Closures have been announced for Honda’s Swindon plant and Ford’s Bridgend site, PSA Group has threatened to pull the new Vauxhall Astra from Ellesmere Port if a no-deal Brexit occurs, and Jaguar Land Rover has cut thousands of jobs in the past year.

BMW’s factory at Hams Hall

While some of the factors are not linked to Brexit, with the slowdown in the Chinese market and the shift away from diesel each having significant impacts, there remains an alertness that the UK’s car industry can ill-afford more bad news.

That is why Jaguar Land Rover’s confirmation last week of billions of pounds of investment for the production of electric vehicles at Castle Bromwich was so well-received, even if JLR’s chief executive Ralf Speth did inject a large warning about another problem for the industry that is looming.

“One thing is clear,” he said. “If batteries go out of the UK, then also the automotive production will go out of the UK.”

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