French carmaker PSA Group has warned that it will only build its new Vauxhall Astra at its Ellesmere Port plant if the UK avoids a no-deal Brexit, in a stark indication of the importance of trade with the EU to the British car industry.
The Astra is the bestselling model under the Vauxhall and Opel brands and will be built in Germany as well as at Ellesmere Port, near Liverpool, if severe Brexit disruption is avoided, PSA said on Thursday.
However, PSA, the parent company of the Peugeot, Citroen and Vauxhall brands, gave a clear warning against a bad Brexit deal, which could disrupt the just-in-time deliveries on which high-volume carmakers depend.
In its announcement, PSA said: “The decision on the allocation to the Ellesmere Port plant will be conditional on the final terms of the UK’s exit from the European Union and the acceptance of the New Vehicle Agreement, which has been negotiated with the Unite trade union.”
The warning underlined the urgent calls from across the British car industry for a Brexit deal that avoids delays or tariffs at the UK border. The Society of Motor Manufacturers and Traders this week warned that every extra minute of delay of goods at the border would cost the industry £50,000.
If Astra production goes ahead in the UK under a smooth Brexit, the decision to build the vehicle at Ellesmere Port would be a major boost for the embattled British car industry and the 1,000 employees at the plant. Securing the new contract is thought to be vital for the future of the factory.
Yet Boris Johnson, who won the largest vote from MPs in the first stage of the Conservative party leadership election, has said that the UK will leave the EU on 31 October, “do or die”. PSA executives have not met Johnson. PSA also owns a Vauxhall plant in Luton, where it employs 1,200 people making the Vivaro van.
Mick Chalmers, regional coordinating officer for the Unite trade union, said a no-deal Brexit would destroy Ellesmere Port’s “hope of securing the plant’s long-term future”.
Ellesmere Port, which currently manufactures the Astra, beat off competition from a plant in Gliwice, Poland. The new model will be built from 2021 onwards, and will secure electric car production in the UK, an important consideration as the industry moves away from the combustion engine.
PSA’s chief executive, Carlos Tavares, has previously made it clear the carmaker would not shy away from unpopular decisions, including shutting factories, in the event of a no-deal Brexit.
Fears over the Ellesmere Port plant’s future have swirled within the industry since the Brexit vote, although the fact that PSA held off making a decision – even as Honda and Ford announced closures of British factories – led some analysts to believe the company was keen to preserve it.
The plant’s survival was probably aided by the quick turnaround of the Opel-Vauxhall business, which was bought by PSA for £1.9bn from US carmaker General Motors in 2017.
Opel–Vauxhall reported its first annual profits in 20 years in 2018 after a major cost-cutting plan. During General Motors’ ownership, the company made $19bn (£15bn) in accumulated losses but Opel-Vauxhall made a profit of €859m in 2018.
