Monday, May 8, 2017

Macron, BMW, Mercedes, Porsche and BREXIT

The news media will generally skip over this topic but it's an interesting landscape.

The UK imports from Germany almost 800,000 cars a year.  That's the single biggest contributor outside of the UK for new cars.  Interestingly enough....these are all high-end type.....BMW, Mercedes, and Porsche.

So, let's look at this odd scenario....Macron winning the French election and going with the big pro-EU stance.  The French are all happy.  The Germans are all happy.  Chancellor Merkel is all happy.

At some point, probably toward October to December (after the German national election and Merkel's re-election)....some reality will occur and extremely tough negotiation talks are engaged upon by the EU folks.  One day, probably before the end of'll be laid out by Brit newspapers that it's very UNLIKELY that a exit deal can be achieved because of the amount of punishment that the EU wants to ensure upon the British people.

The BMW, Mercedes and Porsche folks will come to visit Chancellor Merkel.  If this market is heavily taxed, and a marginal import path exists into the UK....thousands of German jobs are at risk.  These are not low-paying burger-flipper jobs.....these are solid manufacturing jobs....mostly in Bavaria and Stuttgart.  The head of the CSU Party, and the Stuttgart political folks are going to be a bit more unhinged over this development.  To suggest laying off a thousand or two-thousand unthinkable....but that's likely to only be stage one.

Other non-European car manufacturers will be poised in the UK, and ready to move in, with a better import situation....mostly Lexus and Acura.  Maybe the Germans will try to do an end-run around the EU and fix this problem, but I suspect that Macron is a key player in this anti-UK and eventually a anti-German view of EU regulations.

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