Bentley doubles space for parts amid Brexit trade talks concern

Luxury automaker Bentley said it has doubled warehousing capacity in a move that will help it cope with potential disruption if Britain fails to strike a trade deal with the European Union by a year-end deadline.

The U.K.-based unit of Germany’s Volkswagen AG is now carrying between five and 10 days of parts compared with around two previously, Chief Executive Officer Adrian Hallmark said Tuesday in a webinar hosted by the Society of Motor Manufacturers and Traders, which represents British automakers.

“It has costs us millions per year in incrementals, not tens of millions, but that’s still millions that we didn’t want to spend,” Hallmark said. “We’ve actually used that, ironically, to stockpile components in the Covid situation.” Bentley has also opened up new routes of entry for components, he said.

While Britain left the EU in January, a comprehensive agreement governing future trade has yet to be agreed. SMMT CEO Mike Hawes told the virtual conference that Brexit remains the biggest concern of U.K. automakers, even after the hit from the coronavirus, warning that output could slump to levels last seen in the 1950s without a deal on tariff-free terms.

Bentley imports about 45% of the parts that go into its cars, with 90% of those coming from continental Europe, Hallmark said. It’s less exposed to potential export tariffs than high-volume producers since it has a global sales base, shipping only around a quarter of finished vehicles to the bloc.

“Anything that slows down components and costs use more cash and time, or increases the price of a vehicle and puts more cost on the customer, is going to reduce either profitability or demand,” he said. “We see a significant hit from a hard Brexit.”