Brexit: Vauxhall owner PSA considering closing UK car plant after Britain leaves EU, reports say

Car manufacturer also weighing up stockpiling parts to avoid shortages and bringing forward a summer shutdown

Paris-based PSA employs about 3,000 people in the UK, mainly at plants in Ellesmere Port, where it builds the Astra model south of Liverpool, and Luton which turns out medium-size vans (Reuters)

Vauxhall’s French owner PSA is considering shutting down one of its two UK plants in case of a drop in car demand post-Brexit, a source close to the matter has said.

The British car manufacturer is reviewing how it will respond to a potential market, including the feasibility of permanently shutting down one site.

The person, who asked to not be identified discussing private deliberations, cautioned that no decision has been made and PSA, which also makes Peugeot, was still assessing prospects.

Among other options being considered for Vauxhall: Stockpiling parts to avoid shortages ahead of the the breakup — as aircraft engine-maker Rolls-Royce has said it may do — and bringing forward a summer shutdown like BMW, several people familiar with the matter said.

“We do not want to comment at this stage on the Brexit process and its assessment by Groupe PSA, as it is not the final step for implementation,” Vauxhall said in a statement. “We are working in an agile mode, as usual, and we have several solutions to address different scenarios.”

A PSA spokesman declined to comment. Shares in the French car manufacturer rose as much as 2.4 per cent to €20.25 (£19), outpacing gains of 1.1 per cent for rival Renault.

Manufacturers including Airbus have warned for months that they will be forced to pull resources if Brexit leads to border delays, tariffs, or added paperwork that will drive up costs. Theresa May’s plan to ease some of those concerns is on the ropes, leaving her government in crisis and the deal with the EU in limbo with the 29 March divorce creeping nearer.

As May vowed to see her plan through, Rolls-Royce chief executive Warren East called for a pragmatic approach that allowed some disagreements, with any deal being better than none, he told BBC radio.

While few have given details, companies have stepped up contingency planning as the odds rise of the UK crashing out of the EU with no deal.

BMW chief executive Harald Krueger said last month at the Paris Motor Show that the car manufacturer, which builds Minis at its Oxford plant in Oxfordshire, may have to move production to the Netherlands. Philips has been warning since July that it would do the same with its baby products factory in Glemsford.

“The political situation remains uncertain,” BMW said in an email late Thursday. “As a responsible employer, we must therefore continue to prepare for the worst-case scenario, which is what a no-deal Brexit would represent.”

Paris-based PSA employs about 3,000 people in the UK, mainly at plants in Ellesmere Port, where it builds the Astra model south of Liverpool, and Luton which turns out medium-size vans.

Brexit, along with a drop in diesel’s popularity, has already hurt UK car sales this year. New car registrations are down 7.2 per cent, according to the industry group SMMT. Vauxhall’s have declined 11 per cent, while the Peugeot brand is off 2.8 per cent and Citroen has dropped 3.6 per cent.

Earlier this year, PSA announced plans to build a new model of the Vivaro van in Luton and increase production in 2019 with a €100m investment. PSA has announced 650 job cuts at Ellesmere Port since it bought the brand from General Motors last year.

About 80 per cent of the cars made in the UK are exported, with half of those going to the EU, according to the SMMT. The UK accounts for about 10 per cent of PSA’s global unit sales.

Carmakers also import parts and components, which would be vulnerable to any border delays or tariffs. Only 40 per cent of Vauxhall’s Vivaro van components, for example, are produced in the UK, according to a spokesperson. That figure is about 23 per cent for the popular Astra.

If there’s no deal, “my responsibility will be to protect my company,” PSA chief executive Carlos Tavares said in Paris.

Bloomberg