LONDON -- Bosses at PSA Group have told the UK government they would seek to build on the strengths of the Vauxhall car business if they succeed in buying it.
The UK's Business minister Greg Clark went to Paris on Thursday evening to meet French politicians and PSA executives to discuss their plan to buy the European operations of General Motors, Opel, which include the Vauxhall plants in Britain.
The talks have set political alarm bells ringing in the UK and Germany, where there are fears that a sale could lead to heavy job losses at the two businesses.
In a short statement Clark said the PSA executives had "stressed that they valued highly the enduring strength of the Vauxhall brand, underpinned by its committed workforce."
"While discussions are still on-going, they made clear to me that in any deal these were strengths they would wish to build on," he said.
Clark had previously contacted GM President Dan Ammann to express concern over the future of Opel's UK plants. Clark said on Thursday he had been reassured by GM that the firm did not intend to "rationalize" its Vauxhall operations in Britain.
However, Britain's Unite trade union, which met with Ammann and Clark, said it had not received the guarantees it sought. "There are no assurances at the moment," Unite leader Len McCluskey told Sky News. "My immediate priority now is to understand where Peugeot is now in this process." Unite is seeking urgent discussions with PSA CEO Carlos Tavares, McCluskey said.
GM builds the Astra compact car in Ellesmere Port, northwest England, and light commercial vans in Luton, near London. Ellesmere Port is vulnerable to closure because local parts content is 24 percent, compared with a 41 percent average for UK car plants, Garel Rhys, a motor industry academic at the Cardiff Business School, said.
Brexit factor
Two sources close to PSA told Reuters that job and plant cuts were part of the French automaker's ongoing discussions over a potential deal to buy GM's Opel and Vauxhall brands, with UK sites in the front line.
"It's much easier to cut jobs in Britain than Germany," one source with knowledge of the discussions between PSA and GM said, adding that Britain's move to leave the European Union was also a factor in the talks. "Restructuring is very likely to happen at the Vauxhall plants," that source added.
"Opel has a huge problem with its plants not being fully utilized," said Thomas Goettle, head of automotive at PA Consulting in Frankfurt. "They're probably hammering out a deal that's in favor of Germany and France, so I don't see the brightest future for the UK."
Ellesmere Port may be particularly at risk when the current Astra comes up for replacement in 2021, analysts at LMC Automotive said in a note, adding that the model could be consolidated with the next Peugeot 308 platform.
German Economy Minister Brigitte Zypries said on Thursday she expected the proposed acquisition of Opel/Vauxhall by PSA to go ahead.
Germany accounts for half of GM Europe's 38,000 staff. Vauxhall employs 4,500 people in Britain, as well as supporting 17,000 jobs in its supply chain and 20,000 at sales outlets.
Automotive News Europe and Bloomberg contributed to this report
