Aston Martin and Bentley Brace for Britain's Slow-Motion Crash

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(Jan 16): Aston Martin and Bentley Motors saw this crash coming -- but it’s still going to sting.

Speaking onstage at a conference in Detroit before and after the British Parliament rejected Prime Minister Theresa May’s Brexit deal, the chief executive officers of two companies synonymous with U.K. carmaking had been bracing for disaster. Both have been making arrangements to do what they can to avoid problems with their supply chains.

“I’ve done what any sane person would do: I’ve assumed the worst,” Aston Martin CEO Andy Palmer said Tuesday at the Automotive News World Congress, which coincides with the Detroit auto show. “I’ve assumed we’ll crash out of Europe, and in consequence our supply chain will be disrupted.”

Aston Martin Lagonda Global Holdings Plc’s board before this week authorized contingency planning for Brexit that included shipping car components via air freight to allow for the use of ports other than Dover, which faces potential chaos in a no-deal scenario. For the last eight months, Volkswagen AG-owned Bentley has likewise supplied some parts through an alternative port, CEO Adrian Hallmark said at the conference.

“I may have to eat these words -- we are prepared,” Hallmark said.

Grave Warnings

Following Tuesday’s vote in Parliament, BMW AG and the German car industry group VDA issued grave warnings of the fallout from a so-called hard Brexit. BMW, which owns two iconic English brands -- Rolls-Royce and Mini -- said in an emailed statement that the uncertainty of U.K. and EU trade relations are “greater than ever” and that it has to prepare for the worst.

A no-deal Brexit looks increasingly likely and would have “severe consequences,” VDA President Bernhard Mattes said in an emailed statement.

The only way for the U.K. to stay in the EU appears to be another referendum, Aston Martin’s Palmer said in an interview, and that would create constitutional issues. His fear is the only other alternative is for the U.K. to leave by crashing out of the EU, which almost certainly would cause major issues with auto parts crossing borders.

“For us, we’ve had to say, whatever happens, it’s a no deal,” Palmer said. “And any news that improves on that is welcome. And that’s all you can do.”

Stocking Up

German mega-supplier Continental AG has a team of about 100 people dealing with the potential Brexit fallout, including a no-deal scenario, Chief Financial Officer Wolfgang Schaefer said in a phone interview Monday. The parts maker is shipping some components into the country ahead of the looming exit date to cushion against possible supply bottlenecks.

Volkswagen’s sales chief Christian Dahlheim told reporters on Friday the German automaker is doing whatever is possible to prepare for all scenarios, including a hard Brexit, though the company doesn’t anticipate major disruption for its operating business.

“We’ve prepared stockings as well as inventory levels to a degree that we can handle short-term delays in deliveries,” Dahlheim said. Still, a no-deal Brexit would inevitably have an impact on sales volumes as the overall car market would take a hit, he said. - Bloomberg