Hallmark said a hard Brexit would wipe out a quarter of the Crewe firm’s global profits if it absorbed the tariff costs of a no-deal Brexit and it would still lose 20% of its profits even if it passed them on to its customers as its volumes would be reduced.
Modeling of the best volume/profit scenario for Bentley has been done and the result is “hard Brexit wouldn’t kill us but it hurts profitability and slows us down with components”. To that last point, Bentley normally holds two days of stock for components at its factory, but that’s now at 14 days and will rise to 20 days by mid-January to stay ahead of an expected slowdown in the speed of imports in the event of a no-deal Brexit.
“We have safety mechanisms in place but hope we get a deal and don’t need them,” said Hallmark.
Speaking more broadly about the chances of a deal, Hallmark put it at less than 50/50 but understood that automotive was not one of the sticking points on either side.
“The government understands what hard Brexit means to us,” he said. “They agree, they’re fighting, but have told us to get ready for no deal. They’re not scaremongering but it’s real. The gaps aren’t huge and there is goodwill from both sides. As automotive disagreements haven’t come up, it makes me feel that they’re aligned on automotive – so sort the fish out!”
The increase in the cost of imported components would rise by between 2.5% and 4.5% in the event of a no-deal Brexit and the cost of exported cars to the EU would increase by 10%.
Bentley heads into 2021 in as good a shape as is possible in the current market, Hallmark believes. “Q1 this year was a sales and profit record. Then Covid hit… What followed was the biggest loss in a quarter ever in Q2, which more than wiped out the profit of Q1. But we’re now in a much better place than we dare imagine. At one point, we were on for a three-digit-million loss. Our order bank is 50% higher than it was in January pre-crisis, and that in itself was the highest since 2004 with the launch of GT. We’re in relatively good shape.”
Bentley will launch nine new products in 2021, including two new cars in the shape of the Bacalar and reborn Blower, four-engine launches, including hybrid versions of the Bentayga and Flying Spur, and three derivatives, including Mulliner versions of its models.