Chief executive issues warning of ‘unpopular decisions’ including factory closures
The Astra production line at Vauxhall’s Ellesmere Port plant.
Photograph: Matthew Howell/Vauxhall
The chief executive of Vauxhall owner PSA Group said the carmaker would not shy away from unpopular decisions, including shutting factories, if there is a no-deal Brexit.
Carlos Tavares said PSA has built up stockpiles of parts and products in preparation for disruption, and that “the bureaucracies of supply chain are going to be disruptive if there is a no-deal [Brexit]”.
However, Tavares also said that the Vauxhall brand’s appeal to Britons could provide the company protection not available to European rivals in the UK’s large car market.
Brexit was only one of a number of challenges facing European carmakers during 2018, with a regulatory backlash against diesel vehicles denting demand in Europe as well as the threat of tariffs from the US, but PSA Group, which also owns the Peugeot and Citroën brands, announced record annual revenues of €74bn (£64bn) in 2018, up 19% year on year.
Tavares, speaking at the company’s Paris headquarters on Tuesday, said the company would try to diversify its sales to make it less reliant on the European market, where it expects flat sales this year even if there is an orderly Brexit. PSA will relaunch Peugeot in North America after almost 30 years, as well as launching Citroën in India.
PSA’s Opel–Vauxhall business reported its first annual profits in 20 years after a major cost-cutting plan following its £1.9bn purchase from US carmaker General Motors in 2017. During General Motors’ ownership the company made $19bn in accumulated losses, but Opel-Vauxhall made a profit of €859m in 2018.
Opel-Vauxhall runs two factories in the UK, at Luton in Bedfordshire, and Ellesmere Port in Cheshire, which together employ about 2,300 people. While the Luton plant will start production of the new Vivaro van this year, a future investment decision for Ellesmere Port is expected to come after the UK’s trading relationship with the EU after Brexit is decided.
At the start of 2018 unions had feared that Ellesmere Port would close as Tavares, known for cost cutting at Renault before joining PSA, made hundreds of job cuts at Opel-Vauxhall.
Tavares gave no indication that PSA has reached a decision on what part British plants would play in future production, including the UK in the possible contenders for production of new Opel-Vauxhall models.
However, he also gave a stark warning that British factories could close if trade becomes less favourable with the EU after Brexit.
“We can go on the dark side, say, well, perhaps you have to shut down plants and things like that. Well, if we have to make unpopular decisions we will,” he said.
“But on the other side let’s not forget that we have the Vauxhall brand. The Vauxhall brand is warm to the hearts of UK consumers and we may have also the opposite opportunity, to be the survivor of the automotive industry in the UK.”
Tavares’s comments come at a pivotal moment for the British car industry, following the decisions of Nissan to revoke a decision to make its X-Trail SUV in Sunderland and of fellow Japanese carmaker Honda’s plan to end production in Swindon in 2021, at a cost of at least 7,000 jobs. Jaguar Land Rover and Ford have also announced thousands of job cuts this year.