Vauxhall concerns are ignited by PSA/FCA merger proposal, says GlobalData

Following the news that the proposed merger between PSA and FCA is creating concerns over the implications for PSA-owned UK brand Vauxhall and future prospects for its UK manufacturing operations;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“Although the merger proposal, as it stands says that there would be no plant closures arising from the transaction itself, there are bound to be longer-term considerations surrounding overall capacity and manufacturing footprint for the proposed new larger entity.

“PSA has already said that planned future investment – the next Astra model – for the Vauxhall Ellesmere Port manufacturing plant is contingent on the terms of the UK’s exit from the EU. A no-deal Brexit and the imposition of tariffs on parts flowing between the UK and EU would be particularly damaging to the competitive position of a plant that is so heavily reliant on cross-border shipments of components with factories across Europe.

“We estimate that the UK content of Astra production at Ellesmere Port is under 25%, emphasizing the vital role of imported engines, transmissions and other parts, most of them coming from plants elsewhere in Europe.

“While the plant is seen as relatively productive, a PSA/FCA merger would undoubtedly see a full review over time of the new company’s manufacturing operations as part of a strategy to maximize operational efficiencies alongside consolidated engineering and manufacturing to optimise capacity utilization – especially in the highly competitive European market.”

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