French carmaker threatens to pull new model from the UK over Brexit

Posted at 10:46 AM, Jun 27, 2019
and last updated 2019-06-27 12:46:16-04

French carmaker PSA has warned that continued production of the Vauxhall and Opel Astra in the United Kingdom depends on the country’s terms of trade following Brexit.

The company said Thursday that it intends to build the next generation Astra at Ellesmere Port, which is near Liverpool, and at a plant in Russelsheim, Germany.

But production of the vehicle in the United Kingdom is conditional, and depends upon how the country breaks with the European Union.

“The decision on the allocation to the Ellesmere Port plant will be conditional on the final terms of the United Kingdom’s exit from the European Union,” PSA said in a statement.

Auto industry executives have warned that a disorderly Brexit would snarl supply chains and disrupt production. Continued uncertainty over the future terms of trade has caused investment to plummet.

UK factories have been battered as a result. A key survey published earlier this month suggested Britain’s manufacturing industry is contracting for the first time since July 2016.

Individual automakers are taking action.

Ford announced in early June that it will close an engine plant in Wales by 2020. While the US carmaker said the decision was not related to Brexit, it had previously warned of dire consequences from a messy exit.

Honda said in February that it would in 2021 shut down a major plant in England that employs 3,500 people. The plant currently makes up to 150,000 Civics a year for over 70 countries.

Another Japanese carmaker, Nissan, scrapped plans the same month to build its new X-Trail SUV at its factory in Sunderland. It cited uncertainty over Brexit as one reason for the decision.

In March, Nissan said it would also end production of two luxury vehicles in Britain.

Companies have begged the UK government for clarity on Brexit only to see the country slide into a political crisis.

Prime Minister Theresa May is stepping down, and it’s not clear when — or if — Brexit will happen, and on what terms. Her likely successor, Boris Johnson, has not ruled out leaving the European Union without a deal to protect trade.

The UK Society of Motor Manufacturers and Traders said this week that delays caused by a disorderly exit would cost the industry £50,000 ($63,300) a minute.

“Leaving the EU without a deal would trigger the most seismic shift in trading conditions ever experienced by automotive, with billions of pounds of tariffs threatening to impact consumer choice and affordability,” the group said.