Germany's auto industry is losing hope that trade tariffs with Britain can be avoided, despite warnings from British Prime Minister Theresa May that an overly tough stance on post-Brexit commerce would seriously harm the country's EU partners.
"Merkel may force us to walk away from UK profits for the sake of preventing further EU fragmentation," said a senior executive at a German luxury carmaker.
The executive, who asked not to be identified because of the subject's sensitivity, said Brexit looks increasingly likely to be "a disaster" for trade and for German manufacturers.
BMW, along with the Germany-based European arms of GM and Ford, which all have UK plants, know trade barriers would bring large, currently incalculable costs.
Under World Trade Organization (WTO) rules, British exports of complete vehicles could be subject to tariffs of up to 10%.
Ford, Britain's biggest engine maker, warned of 2.7% duties on engines ahead of last June's Brexit referendum.
Duties on components such as gear boxes and brakes shipped from Britain would likely vary around the 3.7% average currently levied by the EU on similar imports from third countries, according to the WTO, unless a preferential deal is struck.
Ms May recently vowed to take Britain out of the EU single market that allows tariff-free trade in order to gain more control over immigration.
At the same time May argued for the "greatest possible" market access. But German Chancellor Angela Merkel responded that London should not get an attractive Brexit deal that mightencourage other departures.

Think tank Civitas estimates that if Britain leaves the EU without a trade deal, German automotive exporters would pay £1.8 billion in tariffs, nearly half the total £3.9 billion faced by EU-based firms.
UK-built vehicles and parts, on the other hand, would be hit by tariffs of around £1.3 billion, according to the group.
But German car bosses are unwilling to undermine Ms Merkel's position. The German Chancellor recently reiterated that EU governments would not negotiate Brexit terms until London had triggered the irreversible "article 50" leaving process, before adding that business leaders should show similar restraint.
That sentiment was quickly echoed by Matthias Wissmann, head of Germany's influential auto industry lobby, the VDA.
"Everything must be done to allow the unfettered flow of goods and services," he told reporters. "But there is one clear priority: we must stand together among the 27 EU member states."
Wissmann's counterpart at Britain's SMMT car industry group also warned UK lawmakers that BMW, Daimler and VW may not push too hard for free trade.
German carmakers see "Europe as more important than the UK market", SMMT chief Mike Hawes told a parliamentary committee in January. "They will align with what is best for Germany."
BMW employs in the region of 8,000 workers in Britain, including at its plants which export roughly £2.4 billion of vehicles and engines, most notably a large majority of the Mini and Rolls-Royce cars assembled there.
Ford, which has warned against tariffs, builds engines in Dagenham and Bridgend for vehicles assembled in mainland Europe. GM builds Opel/Vauxhall Astras on Britain's west coast and expects Brexit to have wiped $400 million from 2016 earnings.
"We are worried," said a director at the German unit of amajor global carmaker. "I don't expect there will be specialdeals for any industry."

Trade duties on components, which can cross the Channel several times before a vehicle is assembled, would require costly supply-chain upheaval to avoid a compounding of duties.
Raw castings from mainland Europe are machined into engine blocks at BMW's Hams Hall plant near Birmingham. Many are then shipped to Germany and fitted into cars destined for the UK.
In all, UK car plants purchase 59% of their components overseas, and two-thirds of those from the EU, the SMMT says. Even where cross-Channel supply chains stayed viable, border formalities would hurt delivery timings, raising warehousing costs and ultimately consumer prices.
Locally made components would become more attractive for British-built cars, but the UK assembly plants could find it harder to win new vehicle programmes in the first place.
Investing in an assembly line for the British market alone -rather than export - becomes viable only above an annual output of about 150,000 vehicles, industry experts explain.
For many models, Exane BNP analyst Dominic O'Brien said, "the UK market is not necessarily big enough to sustain its own dedicated plant." Again, consumer choice and prices suffer.
Some German carmakers have been more vocal in urging Britain to give ground, stressing attachment to their EU workers'freedom of movement.
"Not only free trade but also cross-border employment opportunities...are of proven benefit to business," BMW said.