PARIS, Oct 02 (Reuters): Carmakers ratcheted up their Brexit warnings on Tuesday, with France's PSA Group and Germany's BMW both saying UK production would suffer if Britain leaves the European Union without a deal.
With less than six months before Britain is due to quit the EU on March 29, businesses are increasingly alarmed about the lack of agreement over future trading relations and the possibility of tariffs, delays at ports and extra red tape.
The car industry, one of the few British manufacturing success stories of recent decades, is particularly at risk given the thousands of parts, engines and finished models that move between Britain and the continent every day.
BMW boss Harald Krueger told the Paris Motor Show that he sees a "50:50 chance" of a disorderly, or 'hard', Brexit and that this would lead the company to shift more production of its Mini vehicles - currently focused on its Oxford plant insouthern England - to the Netherlands.
"I told (UK Prime Minister) Theresa May and the European Union that if there is a hard Brexit, both sides are losers. We will no longer fulfil trade agreements and then we are forced to build the car in the Netherlands," Krueger told journalists.
Carlos Tavares, the head of Peugeot and Opel maker PSA Group, which has two factories in Britain, also said a no-deal Brexit would be damaging.
"My plan is to tell Mrs May and Mr Barnier (the EU's chief Brexit negotiator) that a no-deal (Brexit) is not acceptable," he told reporters.
Such an outcome would have "significant consequences", he added without elaborating.
Dieter Zetsche, head of German carmaker Daimler, also told the Paris event that scenarios involving a disorderly Brexit were "highly worrying".
The executives' comments come as the British prime minister said she was preparing to make a new offer to the EU in an effort to break the Brexit talks deadlock.
The various Brexit complications come against the backdrop of a range of challenges facing automakers, including the rollout of costly electric vehicles, tougher emissions rules and potential disruption to trade from the rise of protectionism.
Meanwhile, the pound slid to a three-week low on Tuesday on fears about a conflict over UK Prime Minister Theresa May's Brexit plan escalating, with division on show at a ruling Conservative Party conference.
Sterling's fortunes are being driven by headlines about May's proposal for Britain exiting the European Union in six months and whether she can persuade the block and senior members of her own party to accept it.
In particular, traders are focused on a new offer Britain is preparing to make to the EU on the Irish border, aimed at breaking the deadlock in Brexit talks before a decisive EU summit in late October.
The pound spiked briefly on Monday on a report that Britain might back down on customs checks between mainland Britain and Northern Ireland, a major obstacle to Brexit.
But, by 1000 GMT, sterling had relinquished all of those gains and was trading down 0.6 percent versus a rallying dollar at $1.2952, its lowest since Sept 10. It was flat versus a weaker euro at 88.79 pence.
The leader of the Northern Irish party which props up May's government, Arlene Foster, said Northern Ireland must leave on the same terms as the rest of Britain.
"Foster saying we cannot be separated from the United Kingdom .. is a reiteration of their position since the referendum and the single most import feature in the whole Brexit negotiation," Mizuho's head of FX hedge fund sales Neil Jones said.
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