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September 11, 2019 11:02 AM

Europe's automakers call for compromise to avoid no-deal Brexit

Nick Gibbs
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    PSA's Vauxhall plant in Ellesmere Port is at risk if Britain leaves the EU without a trade deal.

    FRANKFURT -- Politicians in the UK and the European Union need to compromise to avoid a damaging no-deal Brexit, PSA CEO Carlos Tavares said at the Frankfurt auto show.

    "Setting two trains full speed to crash one against the other just to demonstrate your muscles and determination doesn’t seem to be the best way. If the two trains crash, where is the win-win?” Tavares said.

    "I am telling politicians from both sides, you need a deal," Tavares told journalists at the show.

    A no-deal Brexit "would create a lot of disturbance in the industry and would hurt our communities," Tavares said separately in his role as president of the European automakers association, ACEA.

    In July, Tavares told the Financial Times newspaper he was prepared to shut PSA's plant in Ellesmere Port, northwest England, if the UK government was not able to secure an agreement with the EU prior to Brexit, which is scheduled for Oct. 31

    In Frankfurt, Tavares repeated the threat, saying he" would not hesitate" to close the factory.

    "If there was a no-deal with very significant consequences on the business model, we have another responsibility which is to protect the rest of the company,” he said.

    PSA has said the new-generation Astra compact car will be built at Opel’s factory in Russelsheim, Germany, starting in 2021 as well as in Ellesmere Port but the automaker says Ellesmere Port production depends on the UK’s exit terms from the EU being favorable to continuing production.

    Brexit uncertainty is hitting the UK auto industry.

    UK car production has slumped by almost a fifth to the end of July according to figures from the SMMT industry association. A range of issues has been to blame, including falling demand for Jaguar Land Rover products in China, but Brexit has also been cited as a reason.

    In June, Ford confirmed it was closing its Bridgend, Wales, engine factory as part of an overhaul of its unprofitable European operations in an $11 billion global restructuring.

    Honda has said it will shutter its Swindon plant that builds the Civic compact car in 2021. Nissan no longer plans to build the X-Trail SUV in Sunderland, northern England, while Jaguar Land Rover is cutting 4,500 positions worldwide, many of them in the UK.

    BMW plans to reduce output at its Mini plant in Oxford, England, by eliminating a work shift if there is a hard Brexit.

    Reuters contributed to this report

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