Fears have been raised over the future of Vauxhall’s car plant in Luton after owner PSA Group confirmed plans to merge with Fiat Chrysler.
PSA is 12 per cent owned by the French government and with Fiat Chrysler could become a combined car giant worth £40bn. The 50-50 merger has yet to be signed off but it is expected there will be cost-cutting measures of £3.2bn if it goes ahead.
Although both firms insist these savings will be achieved without closing factories, Professor David Bailey, of Birmingham Business School, fears British plants may be at risk.
He told the Press Association: “Luton and Ellesmere Port are both very efficient plants. They’ve competed to win contracts very successfully despite the Brexit uncertainty. But I think, given the merger of these two giants, there will be pressure to take capacity out and British plants will be vulnerable.”
He claimed the firms are likely to face pressure from the French and Italian governments to prioritise factories in their own countries.
The Luton Vauxhall plant employs 120,000 people and its future looked set to be secure in July 2017 when PSA Group’s purchase of Vauxhall was announced.
There was further good news in January 2019, when it was confirmed the new Vauxhall Vivaro van would be built in Luton.
The van was named the UK’s best-selling vehicle in October, selling more than 4,000 units.
But news of the merger has cast a shadow of doubt on the plant’s future, despite PSA’s claim no factory will close.
Luton South MP candidate Gavin Shuker wrote to company CEO Carlos Tavares at the end of October, seeking assurances that car manufacturing will continue in Luton.
Mr Shuker said: “This company has a unique place in Luton’s history and has, as we know, been through some truly difficult times.
“The news that the company that owns it is to again restructure will obviously be a worry.
“Our site has been under threat before – every time I’ve stood with our brilliant workforce to defend it.
“I’ve written to the owners of Vauxhall, and the directors of Fiat Chrysler, to seek assurances and ensure our factory will be safe in any future plans and that any savings will be achieved without impacting future production at Luton.”
PSA Group CEO Carlos Tavares, who will retain his position if the merger is finalised, said: “This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity.”