PSA Group would move Astra production out of UK in a no-deal scenario

29 July 2019

PSA Group would move Astra production out of UK in a no-deal scenario

29 July 2019

PSA Group boss Carlos Tavares has reiterated the need for the UK to secure favourable future terms with the EU or it will move production of the Astra model out of the country.

The business has earmarked a site in southern Europe to produce the Astra for Opel and its British arm Vauxhall, should Britain not achieve a satisfactory outcome when leaving the union. The move would likely lead to the closure of the company’s Ellesmere Port plant, which currently employs over 1,000 people.

‘Frankly I would prefer to put it [the Astra] in Ellesmere Port, but if the conditions are bad and I cannot make it profitable then I have to protect the rest of the company, and I will not do it,’ Tavares told the Financial Times. ‘We have an alternative to Ellesmere Port.’

Unknown position

Tavares’ warning comes as the UK’s new Prime Minister Boris Johnson prepares to renegotiate the country’s exit deal with the EU. However, should such negotiations prove unfavourable, he is prepared to leave on the current 31 October deadline without a deal in place, triggering import and export tariffs and potential customs delays.

Of all the UK’s car plants, Ellesmere Port is the most heavily exposed as 80% of its production is exported to Europe and about three-quarters of its components are imported.

‘We need visibility on what is going to happen in October,’ Tavares said, referring to trade conditions with Europe. ‘For us, it’s quite simple; we need visibility on customs; that’s all. We need visibility on customs for parts coming from continental Europe or the rest of the world, and we need visibility on the customs for cars coming out of the UK to continental Europe. Those are the only things we need; everything else we’ll take care of.’

Two sites

The French carmaker group confirmed earlier this month that it will build the next-generation Opel/Vauxhall Astra at two sites in Europe, with Rüsselsheim in Germany being one of these. 

Production of the Astra is currently split between Ellesmere Port and Gliwice in Poland. Tavares’ comments that a plant in southern Europe is ready to take the additional capacity suggests that Gliwice will not feature in the company’s future Astra plans in any way.

‘We need the second capacity to fulfil the market needs,’ the PSA boss told the newspaper, adding the company had to make a decision within ‘a few months.’

Tavares has not commented on the company’s facility in Luton, which produces commercial vehicles, suggesting the factory is safe from any Brexit planning. Last year, the French company announced it would expand production to include Peugeot and Citroen models alongside Opel/Vauxhall vans.

PSA bought Vauxhall and Opel from General Motors in 2017 and has since restored the serially loss-making business to profit. Last year, the two brands posted a profit of €859m, their first since 1999.

Under PSA’s ownership, Ellesmere Port has laid off close to 900 workers and moved to a single shift in order to become competitive enough to win the production of the next-generation Astra.