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Abu Dhabi, UAEMonday 19 November 2018

Bentley warns 'no-deal' Brexit will hit profits

Luxury British car maker making contingency plans and says failure to secure agreement could mean extended plant closures

Bentley Continental GT. The UK car maker says failure to agree deal on EU divorce will adversely affect earnings and operations. Bentley
Bentley Continental GT. The UK car maker says failure to agree deal on EU divorce will adversely affect earnings and operations. Bentley

The boss of UK luxury car maker Bentley said failure to reach a Brexit deal would be quite damaging to annual profit in the worst case scenario, limit the company's ability to invest and could lead to its plant closing for days.

Chief executive Adrian Hallmark said the company was already preparing by building up some stocks and switching from the port of Dover in the south-east of England to the north-east port of Immingham to bring in certain parts with more contingencies to be enacted from December if needed.

Like the rest of the sector, the Volkswagen-owned brand, which builds about 11,000 vehicles at a northern English plant in Crewe, is worried about duties and 10 per cent tariffs under World Trade Organisation terms.

"Best case, it's an annoying impact on our annual profitability," Mr Hallmark said. "Worst case, it's quite damaging on our annual profitability so a full no deal Brexit would hurt us as a company, it would limit ability to invest."

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London and Brussels hope to strike a Brexit agreement next month but Mr Hallmark said if there was no deal by the end of the year, the car maker would have to consider stockpiling more and closing its plant for a few extra days to handle any disruption.

"We may work for four days, or we may have a longer Christmas break and a longer Easter break if there is no deal so that we can smooth the period between now and the middle of next year," he said.

Mr Hallmark, who took over as chief executive in February, is also trying to make the brand's range more environmentally-friendly and presented his plan to the board earlier this year.

"It was taking stock of all the models, all the powertrains, all the future technologies that we needed to invest in and re-cut the plan to be more electrified than we were," he said.

Bentley expects to near a record 11,089 sales this year despite having faced delays to the arrival of its Continental GT model and the challenge of re-certifying some vehicles due to stricter emissions rules.

The car maker posted an £71.2 million (Dh333.8m) loss in the first six months of the year and will remain in the red for its full-year performance, Mr Hallmark said.

It also faces a decision within around a year over developing its first pure-electric vehicle which it hopes could be available by mid way through the next decade, he said.

"When is the first full-electric Bentley? That is currently in the decision process but our target is definitely before 2025."