BMW AG has moved some engine output from Britain due to Brexit in a further sign of the decisions companies are having to take to handle uncertainty over the U.K.'s exit from the European Union.
U.K.-built engines were being sent to South Africa, where BMW currently builds the X3 CUV, but because they will no longer have EU status after Brexit the cars would lose their tax-free import status into Europe, BMW production chief Oliver Zipse said on Tuesday.
"Hams Hall (engine plant) doesn't build any South Africa products anymore, which is of course, bad for the U.K.," said Zipse, who is the frontrunner to be the company's new chief executive according to sources. "It's not a huge amount," he added.
A BMW spokesman said volumes at the Hams Hall site would be stable this year and that the plant would be exporting more to the United States.
Britain is due to leave the bloc on Oct. 31 and Jeremy Hunt and Boris Johnson, who are both vying to replace Prime Minister Theresa May, have said they are prepared to leave without an agreement, although it is not their preferred option.
The U.K. car industry, which has posted slumps in sales, production and investment since 2017, is worried that a disorderly exit could lead to tariffs of up to 10 percent, additional bureaucracy and costs.
Free trade agreements also often require a minimum amount of local content at around 55 to 60 percent with British components counted alongside other European Union parts at present.
That could change later this year depending on the nature of Brexit.
Also on Tuesday, BMW unveiled its new electric Mini which is due to go into production later this year.
