BMW may increase prices.

          Although BMW’s financial outlook this year is relatively optimistic, Brexit may have some negative effects on BMW.

          On December 16, Nicolas Peter, the chief financial officer of BMW, predicted in an online roundtable that the profit margin of BMW's automotive business this year will be 2%-3%, which is at the upper limit of the forecast range. Free cash flow will be significantly higher than the previously expected 1.5 billion euros (about 12.25 billion yuan).

         However, Britain's no-deal Brexit will be a disadvantage. Peter said that if the UK has no agreement to leave the European Union, BMW will spend about 500 million euros each year on paying auto tariffs.

         In order to offset this part of the expenditure, BMW said it will increase the price of some models, including MINI produced in the UK and sold to Europe, and BMW imported to the UK. However, these measures still cannot fully offset the losses caused by tariff increases.

         However, the UK is still a relatively important market for the BMW brand. In 2019, BMW produced 230,000 MINI and Rolls-Royce cars at its plant in the UK, of which more than half were sold to the European Union.

          Peter said that starting in 2023, BMW will start producing MINI COUNTRYMAN at the Leipzig plant in Germany and MINI cars at the Chinese plant.

        In addition, due to the dual impact of Brexit and the epidemic, the automotive supply chain will also be affected. "In the long run, we need to determine the customs situation. We hope that the UK and the EU can reach an agreement." According to Bloomberg News, BMW has begun hoarding parts to ensure production.

         Earlier, Reuters reported that BMW’s customs manager Stephan Freismuth said that about 90% of the parts used in BMW’s UK plant come from continental Europe. "If in the end the supply chain will be interrupted at the border, we will not be able to produce cars in the UK."

         Britain and the European automotive industry are closely connected. According to data from the European Industry Association, in 2018, 8 out of 10 cars assembled in the UK were exported, and nearly 700,000 cars were shipped directly to the 27 EU countries. At the same time, the European Union shipped 1.8 million new cars to the UK, accounting for 85% of the total UK car imports.

         On December 31, 2020, the UK will end the Brexit transition period and formally withdraw from the existing trade framework with the European Union, but the Brexit trade negotiations are still pending. The leaders of both sides indicated that they will continue negotiations. But at the same time warned, "It may not be possible to reach an agreement."