British government should cover cost of a bad deal for Vauxhall plant, boss suggests
A Vauxhall worker at Ellesmere Port, Cheshire. The factory is seen as vulnerable and its owner, PSA, has already stopped investing in it.
Photograph: Bloomberg/Bloomberg via Getty Images
Peugeot could demand compensation from the British government to keep its Vauxhall factory in Ellesmere Port open in the event of a bad Brexit deal, its chief executive has said.
Carlos Tavares, the head of Peugeot’s owner, PSA, said the carmaker’s European workers should not be forced to bear the costs of “customs barriers” between the UK and the EU when the transition period finishes at the end of the year.
Carmakers have voiced concerns about the future trading relationship between the UK and EU, with repeated warnings that tariffs and customs checks could threaten the survival of large parts of the industry.
The Ellesmere Port factory in Cheshire, which employs about 1,000 people, is seen as particularly vulnerable because a decision on building a new Vauxhall Astra model is overdue. PSA, which is merging with Fiat Chrysler Automobiles, has already stopped investment in the factory.
In a call with journalists on Tuesday, Tavares said: “If we couldn’t find a business case … we would have to ask the UK government to compensate for that, because it is not ethically acceptable that we ask the continental European workers to pay for the customs barriers to enter the UK market.
“There is a point in time that the UK government needs also to respect its own people by creating conditions for the business in the UK to fly.”
Tavares’s comments came as carmakers arranged phone calls and online launch events to replace the Geneva motor show, which was cancelled because of the coronavirus outbreak that has already rocked the global car industry.
BMW executives swapped handshakes for fist bumps as they unveiled their new i4 electric car concept, a version of which is due to go on sale next year. The presentation was streamed from its Munich headquarters a day after the company quarantined 150 research and development employees after a colleague caught the virus.
On a call with journalists, Ola Källenius, the chairman of the Mercedes-Benz owner, Daimler, said the company had been gradually increasing production at its Beijing plant since 10 February. The outbreak had highlighted the need to track supply chains back to source, he added.
“This is really day-by-day management,” he said. “It is too early to tell what the full impact will be.”
Tavares said coronavirus had been a “wake-up call” for carmakers that they must take control of battery supply chains that are heavily dependent on China. Peugeot had been forced to step in to help a South Korean battery producer to increase production at a factory in Poland, with supply chains creaking.
Shutdowns of battery materials plants in China in particular could make it more difficult for carmakers to hit EU emissions targets this year and next, according to Matthias Schmidt, a Berlin-based independent automotive analyst. Under the rules, which came into force at the start of the year, carmakers must reduce average carbon dioxide emissions of cars sold in the EU below an average of 95g per kilometre, or face steep fines.
China is the world’s key centre for battery manufacture. Of 442 companies involved in the automotive battery supply chain, 207 are based in China, according to the data supplier MarkLines.
Honda said on Tuesday it was temporarily cutting production at its factory in Saitama, Japan, because of difficulties sourcing parts.
The British supercar maker McLaren said it was flying in parts to bypass problems in its supply chain.
As well as supplies, the outbreak has already hit carmakers’ revenues. Sales have plummeted in China, after the world’s largest car market virtually ground to a halt in early February as quarantine conditions were imposed. European and US sales could also be affected as the virus spreads.