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Vauxhall: Future investments in UK will depend on future trading relationship with EU

Vauxhall job losses not due to Brexit, say bosses. But it warns future investment will depend on Brexit outcome.


Vauxhall has announced plans to cut around 400 jobs at its Ellesmere Port plant citing falling sales behind the decision. The BBC reports a spokesman for Vauxhall as saying the job losses had nothing to do with Brexit uncertainty. He said that whilst sales had grown of SUVs across Europe, sales of the estates and saloons made in Ellesmere Port had fallen.

However, Unite the Union has pointed out that “faltering consumer confidence and growing economic uncertainty” will have impacted on sales. Unite general secretary Len McCluskey said: “Quite clearly, economic concerns are having a serious impact on consumer confidence.” And he added: “When people feel insecure about the future, they do not invest in expenditure like a new car.” McCluskey went onto call for the government to “give PSA and other manufacturers a clear signal that government will do all it needs to do to support this crucial sector through the Brexit process.”

Vauxhall was bought by Peugeot and Citroen owner PSA Groupe earlier this year amidst speculation about potential cost cuts. In a statement, the carmaker reaffirmed its commitment to its plant at Ellesmere Port. However, the company said it would not be “in a position to consider future investments” until the future relationship of the UK and EU became clear.

Once it has enough visibility on the future trading relationship with the EU, and the plant competitiveness has been addressed, the company will be in a position to consider future investments.

Vauxhall, PSA Groupe

The UK car industry has long been vocal about the threat of Brexit and has urged the government to agree a new deal that would keep the UK in the single market and customs union. Sky News’ Faisal Islam outlines in detail the risks faced by the car industry over Brexit in a Brexit Forensics report. Ultimately, being outside the single market and customs union would likely increase business costs and reduce the UK’s competitiveness.

The carmaker’s comments regarding future investments show it is being cautious. And it’s not the only one. Other UK car manufacturers including Nissan and Toyota have also said they would “re-evaluate” investment once the Brexit terms are known.

In a series of tweets, Faisal Islam suggests Vauxhall’s reference to “future investments” could relate to a new Astra model, which the carmaker is due to make a decision on next year for production in 2021 . He suggests that Ellesmere Port could be competing against plants in Poland and France where customs barriers won’t be an issue.

And Islam further points out PSA Groupe announced plans for “unspecified vehicle production” at its Sochaux and Mulhouse plants last week – with production due to commence from 2020/2021.

In a press release, PSA Groupe said: “The production of the new vehicles, the details of which will be revealed at a later date for strategic reasons, will secure medium-term manufacturing visibility for the plants, which are currently undertaking modernisation projects.” The statement goes on to say: “Thanks to these upgrades, both plants are becoming more efficient and will soon be among the best performing in Europe.”

Unfortunately, with businesses including Vauxhall holding back on investing further in the UK, damage to the country’s competitiveness is already being done. The job losses announced this week may not be due to Brexit. But that doesn’t mean the UK car industry isn’t already seeing a negative impact from Brexit.


Image: © Pajor Pawel / Shutterstock.com
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