The go-ahead for the investment came yesterday after Vauxhall's parent company, General Motors, and the French car group Renault signed an agreement in Paris to develop a new medium van range.
As part of the agreement, Renault will start supplying Vauxhall with a version of its Trafic van early next year. It will be sold in Britain as the Vauxhall Arena and will replace the Midi, which IBC stopped building earlier this year.
The new van will have a weight range of 2.5-2.8 tonnes and is due to go into production at the turn of the century. Output of the van from the IBC plant, which already makes the Frontera four-wheel drive vehicle, will be 60,000 a year and 75 per cent of production will be for export.
Together with development expenditure, the total cost of the van project could be as high as pounds 400m. Nick Reilly, chairman of Vauxhall and IBC Vehicles, declined to say what total investment would be but he said it was such that neither manufacturer could have afforded to launch the new van alone.
Just under half the pounds 180m investment will be at the IBC plant and the rest, funded evenly by Vauxhall and Renault, will be spent on supplier tooling.
The agreement will also see Renault supplying Vauxhall with an entirely new van for the heavy sector of the market in two years. The van, to be manufactured at Renault's Batilly plant in France, will replace the Renault Master and will compete with the bigger end of the Ford Transit range.
The European van market is running at around 300,000 a year. The 60,000 production targeted by Vauxhall and Renault for the new van at Luton is significantly higher than the combined output of the Trafic and Midi ranges.
The Luton plant employs 1,800 on production of the Frontera, which is running at 33,000 a year.
Although production of the Midi was phased out earlier this year there were no job losses as workers were shifted onto the Frontera line. IBC Vehicles is 82 per cent owned by General Motors and 18 per cent by Isuzu Motors of Japan.Reuse content