PSA Group Chief Executive Officer Carlos Tavares played down concerns about Brexit as he unveiled a plan by the French carmaker to invest in a factory near London in a bid to revive the Vauxhall brand it acquired last year.
“We are hearing many remarks from the UK government that make us think that they are negotiating with the European Union to limit, as much as possible, future trade barriers,” Tavares said. “Among all the uncertainties we’re facing right now, Brexit isn’t the strongest.”
The maker of Peugeot and Citroen cars will invest about 100 million euros ($123 million) to raise capacity at a factory in Luton to 100,000 vehicles annually, Tavares told reporters on a call after visiting the site. The decision was made after PSA reached an agreement with UK unions. The plant produced 60,000 Opel-Vauxhall Vivaro medium-sized vans last year.
Increased production at Luton is a boon for UK Prime Minister Theresa May amid concern that manufacturers may cut jobs and move production out of the country as it leaves the EU. Tariffs and other hurdles to trade after Brexit could crimp auto output since parts routinely move across borders several times during the manufacturing process. The prospect of Brexit has sharpened focus on competitiveness at PSA’s factories in the country, Tavares told Bloomberg in 2017.
“Vauxhall’s decision to invest in the UK is testament to the world-renowned expertise of the British automotive industry and workforce,” May said, adding that the company has agreed to safeguard 1,400 jobs. The decision to produce the Vivaro’s next generation in Luton was “secured in part thanks to the 9 million pounds of government funding.”
On the call with reporters, PSA’s Tavares also raised the possibility the company would hire between 300 and 400 more workers at the site if demand for commercial vehicles grows as planned. PSA purchased the Vauxhall and Opel marques last year from General Motors Co. for about $2.7 billion and Tavares has pledged to turn both around. In order to boost output in Luton, the manufacturer is planning to pick up spare capacity by ending a venture at the site between the Vauxhall brand and French rival Renault.