PSA to boost UK presence in the event of a ‘hard Brexit'

08 March 2017

PSA to boost UK presence in the event of a ‘hard Brexit'

March 08, 2017

PSA Group (Peugeot Citroën) chief executive Carlos Tavares has promised to increase the company’s base in the UK in the event of a ‘hard Brexit’. This is a potential boost for the British car industry and runs contrary to fears that it would suffer from leaving the EU.

Tavares said the UK’s exit would present an ‘opportunity’ to source more components from the UK, adding credence to calls from Nissan and others to strengthen the base for component production in Britain to counter the imposition of import tariffs. 

Following PSA Group’s €2.2 billion deal to buy rival Opel and the UK’s Vauxhall, Tavares said: ‘A hard Brexit from UK plants will be a nice opportunity in terms of business. This is something that the UK government completely understands.’ 

He added: ‘If it is a hard Brexit, then the supplier base needs to be developed. […] It is important that we source parts from the UK, so that the cost structure will be more in pounds.' 

However, Tavares also warned that the UK car market could be heavily hit by a hard Brexit, and that the British industry would be left ‘in a better shape’ by a comprehensive tariff-free trade deal with the EU after Brexit. 

In further quelling of fears of Vauxhall cuts, Tavares said that the company needs manufacturing in the UK because it sells a large number of cars in Britain, the second-largest car market in Europe. 

He has been in regular contact with UK Prime Minister Theresa May and her government ministers.  The UK government stressed to Vauxhall itslong term commitment to ensuring the competitiveness of the [UK] car industry’. 

This competitiveness also includes the UK’s goal to become a major base for electric vehicle research and development. Opel chief executive Karl-Thomas Neumann, worked prior to the merger on a strategy to turn Opel into an electric-only brand, according to Manager Magazin. However, Opel’s Ampera-e electric car is based on General Motors’ (GM) Chevrolet Bolt tech. While GM, as part of the deal, is allowing Opel to use this electric tech under licence, its is only for the current generation and so the newly combined PSA-Opel needs to swiftly develop its own electric vehicle platform. This is shaky foundations on which to build an electric-focused brand and the rapid pace of electric vehicle development means the Ampera-e technology will inevitably be outdated quicker than the average model life cycle of around five to six years.