Peugeot-Citroën plays down fears of Vauxhall job losses following £1.9bn General Motors deal

The deal has raised concerns of job losses at Vauxhall’s UK factories

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Peugeot-owner PSA Group has sought to play down fears that its £1.9bn deal with General Motors to buy the Opel and Vauxhall brands for £1.9bn, will result in job losses and factory closures in the UK.

The acquisition will create a manufacturer with about 17 per cent of the European car market and dramatically shake up the region’s automative industry creating the second-biggest auto group in Europe after Volkswagen.

However, the plans have sparked intense fears about what it might mean for jobs in the UK.

Vauxhall employs 4,500 people at its Ellesmere Port and Luton plants, but the French government has a 14 per cent stake in PSA and there are concerns that political pressure could be applied to prioritise jobs in France.

Carlos Tavares, chairman of PSA’s managing board promised to keep existing GM commitments to workers, but added that future investments would depend on performance. 

GM Europe has not made an annual profit since 1999, something PSA said would change. 

Both companies said the deal was expected to generate annual savings of £1.5bn by 2026, with Opel generating an operating profit margin of 2 per cent by 2020; and 6 per cent by 2026.

“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees,” Mr  Tavares said in statement.

“As long as we improve the performance and we become the best, there is no risk they should fear,” he told the BBC.

GM chairman and chief executive officer Marry Barra, said: “We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects.”

It emerged that Prime Minister Theresa May told Ms Barra on Sunday that UK jobs need to be protected, as the US carmaker put the finishing touches to the sale of its European arm.

“Ms Barra made clear that Vauxhall would remain a British brand and that the deal would recognise and respect all agreements regarding the workforce,” Ms May’s office said in a statement.

However on Monday, Ms May’s official spokesman insisted that no specific assurances had been given to Peugeot to secure the future of the UK plants.

Business Secretary Greg Clark said the Government welcomed the assurance by PSA that they will respect the commitments made by GM to Vauxhall’s employees and pensioners.

“We will continue to engage and work with PSA in the weeks and months ahead to ensure these assurances are kept and will build on the success of both sites for the long term,” Mr Clark added.

Later in the Commons, Mr Clark said the sale was linked to a wider restructuring of General Motors rather than Brexit.

Head of Unite union Len McCluskey said thousands of Vauxhall workers at Ellesmere Port and Luton had endured a “nerve-racking” few weeks and needed assurances over the future of the factories.

“I am determined that we can convince the new boss, Mr Tavares, that it makes sense for him to continue to build in Britain. Our plants are the most productive in the European operation, the brand is strong here, the market for the products is here, so the cars must be made here,” Mr McCluskey said.

“But there is also a role for the government to play. The uncertainty caused by Brexit is harming the UK auto sector.  Wednesday’s Budget is a perfect opportunity for the government to make is clear that it will preserve our trading arrangements and that it will invest for our auto sector’s future now, beginning with assistance for the reshoring of components,” he added.

Shares in PSA rose as much as 5.25 per cent to €20.06 , the highest level since July 2011 and closed 2 per cent higher.

General Motors shares opened lower in early US trading, and were trading down 2 per cent at market closing time in the UK.

 

Additional reporting by PA

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