With the infamous decision of the United Kingdom to leave the European Union, many have wondered what the economic effects would be for consumers around the world. With the MINI Cooper being known for its British roots (and for still being manufactured in the United Kingdom), we at MINI Edmonton wondered how that would affect us as a dealership and you as a consumer.
We have compiled everything we know so far about the latest news following the historic decision, and how its parent company has reacted since then. Read on to learn more about how Brexit may affect the production of the MINI Cooper in the coming years.
Plants in the UK Might Close
MINI is owned by the BMW Auto Group, (BMW AG), which also produces both BMW and Rolls Royce models. With the potential for supply chain costs increasing, talks have circulated amongst high-level officials in the company to potentially close down BMW plants in the UK. BMW uses a ‘just-in-time’ supply chain model to manufacture its cars, which means their materials arrive “just in time” to be assembled, which reduces the need for large inventory and higher storage and ordering costs. This same plant in the UK is responsible for the production of most MINI models, and its closure could leave BMW AG in a very complicated financial situation.
Speaking of cost increases, the effect it will have may likely lead to prices for MINI models experiencing a substantial bump to compensate for the expenses. BMW’s head of purchasing, Markus Duesmann, stated that “Even if Britain struck a trade deal [to keep] duties at zero, there will still be a “significant” effect on trade from other customs rules.” What this means is that new customs rules as an effect of Brexit will increase the prices of both cars and parts because of tariffs and trade barriers. This will, in turn, affect the profitability of most BMW AG cars produced, leading the company to increase prices for consumers.
BMW AG recently employed a special task force, assigned to plan and analyze the potential economic aftermaths following Brexit. At the moment, Duesmann says that they’re “already revising the logistics channels for the UK, so that [BMW AG] will be able to manage the coming border, whichever duties will be in place in the end.” In the meantime, the company will continue with business as usual, with future plans to keep producing the Electric MINI in the UK, regardless of what outcome may arise.