BMW chief warns Johnson to ‘listen to economy’ on Brexit

The chief executive of BMW has urged Boris Johnson to "listen to the economy" on Brexit in a "personal message" to the UK's new prime minister.

Harald Krüger said the prime minister should seek a “compromise that is acceptable to everyone,” warning that a “hard Brexit is not in the interests of the country” and “both sides will lose” if the UK leaves without a deal.

His warnings come a day after figures showed that carmakers had spent £330 million (€362 million) preparing for Brexit, and after the boss of Vauxhall owner PSA warned that the company would divert work to European plants in the case of a no-deal scenario.

BMW, which owns the Mini and Rolls-Royce brands, is one of the UK's largest automotive investors and exporters, with four British plants.

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The Mini is the second-most-exported car from the UK, after the Nissan Qashqai, while the company also imports more BMW models into Britain than into any other European country.

Dialogue

Mr Krüger said: “Listen to the economy and listen to the people. You need to have a dialogue, I hope you can come to a compromise that is acceptable to everyone.”

While the company shut its UK plants during April to try and avoid disruption following the original Brexit date, the business will not be able to repeat this later in the year, in part as the Mini plant ramps up production of its new electric model.

“It’s important that companies remain highly flexible, we are prepared for all scenarios,” he said.

The company is facing challenges from slowing sales and rising costs from the trade war between the United States and China, which pushed BMW's profits for the second quarter down by a third.

Pretax profit fell from €2.9 billion to €2.1 billion, although revenues rose 3 per cent to €25.7 billion as car sales climbed 1.5 per cent to 647,000. Its operating margin was 8 per cent, down from 11.5 per cent a year earlier.

BMW also blamed higher spending on new models and electric vehicles for the figures, which were fractionally better than had been expected, prompting a slight rise in the share price by lunchtime.

"In an extremely volatile auto world, this is very good news," said Evercore ISI analyst Arndt Ellinghorst.

Stepping down

It is the final set of results of Harald Krüger before he steps down as chief and is replaced by Oliver Zipse on August 15th.

They were similar to rival German luxury carmaker Daimler, which posted a loss for the second quarter after provisions for fines and slowing sales in results announced last week.

BMW said car sales fell in the first six months in Europe and the US, but rose in both Germany and China.

Carmakers are being hit by slowing sales in the US, China and Europe, while also facing increasing cost pressures on raw materials and the need to invest in expensive new technologies such as electric drivetrains.

In June BMW promised to accelerate its electric rollout, moving its targets of releasing 25 electric or hybrid models from 2025 to 2023, and increasing the number of pure battery models from 12 to at least 13.

Half-year profits at BMW halved to €2.8 billion, in part because of a €1.4 billion provision in the first quarter to cover a possible fine from EU authorities over allegations it colluded with other carmakers to slow the rollout of clean engine technology. – Copyright The Financial Times Limited 2019