PSA warns Brexit disruption is inevitable

PSA Group has warned that Brexit will disrupt the European auto industry even if a trade deal emerges from high-stakes negotiations between the UK and European Union.

"There will be disruptions," Alison Jones, the UK managing director for PSA, said Wednesday at a Financial Times conference. "We're as ready as we can be without knowing the outcome."

British and EU negotiators are trying to strike a post-Brexit trade deal before the end of the week, with officials on both sides saying the outcome is still too close to call.

The auto industry has multiplied calls in recent weeks for a deal that wards off potential tariffs on vehicles and parts. Failure to reach a deal could cost the industry 55.4 billion pounds ($74 billion) by 2025, the Society of Motor Manufacturers and Traders said last month.

A Brexit deal is critical to PSA's Vauxhall plant in Ellesmere Port, northwest England.

PSA CEO Carlos Tavares said earlier this year that investment at the site has been frozen and the business case for the factory would be re-evaluated once trade terms between the EU and UK are worked out.

"We need to know terms of a deal to make investment decisions," Jones said Wednesday. "That is the frustration for our industry in the UK and mainland Europe. It's the lateness of the final decision."

Regardless of whether a trade deal is reached, she said rules of origin would affect trade of batteries and plug-in vehicles and that a suitable agreement or transition period is needed.

In March, Tavares said it was possible PSA would ask the British government for compensation for any trade barriers.

The company employs about 3,000 people in the UK, mainly at facilities in Ellesmere Port that builds the Astra compact car and another in Luton, near London, that produces midsize vans.