The United Kingdom’s Brexit transition period will end after December 31st, 2020. With various loose ends of the country’s exit deal yet to be tied up, companies in various industries are facing uncertainty regarding future trade with Europe. Luxury car manufacturer Bentley is looking to mitigate against supply-chain bottlenecks that may arise as a result. It has done so by hiring five Antonov cargo aircraft.
A long-term plan
The UK voted to leave the EU in June 2016, in a move that has become known as ‘Brexit.’ However, in the four and a half years that have followed, the country has struggled to negotiate its exit deal. The UK’s transition period will cease at the end of the year. As such, time is running out for policymakers in Westminster and Brussels to establish the terms of the country’s future trading relationship with the EU.
Debates surrounding the future of UK-EU trade have been a staple of European politics for several years now. As such, luxury car manufacturer Bentley’s mitigation plans, as reported yesterday by Reuters, have been in the pipeline for some time. The company has hired five Antonov cargo jets “to help overcome potential supply bottlenecks in the event of a disorderly exit.”
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Dependent on the European market
These aircraft will fly in and out of Manchester. They should prove crucial in mitigating against potential bottlenecks in the supply chain in the event of a ‘no-deal’ Brexit. Although Bentley constructs its cars in the UK, it remains hugely dependent on UK-EU trade. It imports as many as 90% of its components from continental Europe. Furthermore, it exports 24% of its vehicles to European countries.
If the UK was unable to secure an exit deal in time, companies like Bentley would be subject to 10% import tariffs. While costly, this would still prove less damaging than disruption to its supply chain. It plans to negate the cost of the potential tariffs with cost-cutting measures and raised prices.
Despite the uncertainty of Brexit, Bentley appears to have mitigated well for a worst-case scenario. While 2020 has been a challenging year economically, Bentley looks set to break even over this period. According to its Chairman and CEO Adrian Hallmark, it expects to sell over 10,000 vehicles this year. It has been boosted particularly by a rebound in demand in China, where sales are up by a factor of 35%.
An established luxury car manufacturer
Bentley Motors Limited was founded in Cricklewood, North London, in January 1919. In its early years, Bentley was known for its immense motorsport pedigree. Indeed, it won the 24 Hours of Le Mans five times between 1924 and 1930.
Today, the company’s headquarters are in Crewe, Cheshire, and it recently celebrated its centenary year. Consisting of over 4,000 employees, Bentley was acquired by the Volkswagen Group in 1998. It is known for its luxury cars, such as the Arnage and Mulsanne, as well as its sports models, such as the iconic Continental GT.
What do you make of Bentley’s plans to hire Antonov aircraft to ensure the continuation of its supply-chain operations in the event of a no-deal Brexit? Let us know your thoughts in the comments.