Belfast Telegraph

PM speaks with Peugeot boss and pledges commitment to Vauxhall

Theresa May has sought to reassure the French motor industry boss expected to acquire Vauxhall of the Government's continued commitment to supporting the car industry in the UK.

The Prime Minister spoke by telephone with Carlos Tavares, the chairman of PSA Peugeot-Citroen which is in negotiations with US giant General Motors to buy its loss-making European operation.

The move has prompted fears for the future of the 3,900 workers at Vauxhall's Ellesmere Port and Luton plants who could be vulnerable in any rationalisation programme by the new owners.

However, Downing Street said that in Mrs May's call with Mr Tavares, they had discussed their "shared desire to protect and promote" the jobs supported by the Vauxhall brand.

"The Prime Minister and Mr Tavares discussed the importance the UK attaches to Vauxhall's plants at Ellesmere Port and Luton and their shared desire to protect and promote the jobs it supports and what Mr Tavares referred to as the 'iconic' Vauxhall brand within the wider group," a No 10 spokesman said.

"The Prime Minister reiterated the Government's commitment through our modern industrial strategy to creating and supporting the right conditions for the UK automotive industry to go from strength to strength, now and into the future.

"A particular shared goal was strengthening the UK's automotive supply chain. The Prime Minister and Mr Tavares agreed that they and the Business Secretary would remain in close contact as discussions progress to ensure UK interests continue to be at the forefront of any future deal."

The Press Association understands that General Motors (GM) and PSA are eager to ink a deal within the next two weeks to prevent the proposed tie-up overshadowing their presence at the prestigious Geneva Motor Show.

Analysts have predicted the deal will lead to the closure of the Ellesmere Port plant and see manufacturing of the Astra moved to France.

GM's European operations include Vauxhall and Opel, while PSA Group owns Peugeot and Citroen.

Around 1,900 staff manufacture the Vauxhall Astra at Ellesmere Port and a further 1,500 people produce the Vauxhall Vivaro van in Luton.

Analysts at the Evercore ISI said PSA Group's swoop for GM's loss-making European business would trigger the closure of Ellesmere Port, alongside GM's Eisenach plant in Germany and PSA's Villaverde plant in Spain.

"Given the massive overlap of the two businesses, there should be no illusion as to what will need to happen in order to make a business combination work," they said.

"It's about hard restructuring in Germany, the UK and in Spain, resulting in 5,000 manufacturing job cuts."

Speaking at the annual conference of the EEF manufacturers' organisation, Business Secretary Greg Clark said it was right that the Government was "active and engaged" with the companies given the importance of Vauxhall to the UK.

He said he had held discussions with General Motors and PSA and that talks were continuing.

"A deal has not been done. It is not the right time to be talking about the contractual aspects of this."

The tie-up would cause GM to exit the UK and Europe, while transforming PSA Group into Europe's second-largest car maker with a 16% share of the market.

Vauxhall is a major employer in the UK, with around 35,000 staff, including 23,000 in its retail network and 7,000 in its supply chain.

PSA Group said on Tuesday that it would respect existing job guarantees at Vauxhall and Opel.

GM said last year that it had to raise UK car prices by 2.5% after the plunge in the value of the pound following the EU referendum result, which caused the British car industry to hit a ''speed bump''.

Announcing its full-year results earlier this month, the Detroit-based firm behind Chevrolet and Cadillac said GM Europe had narrowed losses to 257 million US dollars (£206 million) in the year to the end of December, from a loss of 813 million US dollars (£651 million) the year before.