News | Published October 31 2019

Proposed PSA-Fiat Chrysler puts Vauxhall's future in doubt

The proposed merger between Fiat Chrysler and French corporate entity PSA Group has sparked fears that Vauxhall, which operates under PSA’s control, could be prone to future restructuring.

The merger between PSA and its US-Italian rival could create the fourth largest car company in the world with a joint market value of £39.9 billion, inferior only to Volkswagen, Toyota and the Renault-Nissan partnership.

Talks remain at an early stage, but any merger is likely to look at significantly cutting down on costs, which may impact Vauxhall with those connected to the brand concerned that it could be vulnerable as collateral.

It employs 3,000 people in the UK and trade unions have now called for talks with PSA to seek reassurances over its long-term future before any merger materialises.

Both PSA and Fiat Chrysler have denied that shutting any of their plants are in their plans, but UK trade unions remain sceptical.

National officer at the Unite trade union, Des Quinn, said: “Merger talks combined with Brexit uncertainty is deeply unsettling for Vauxhall's UK workforce which is one of the most efficient in Europe.

"The fact remains, merger or not, if PSA wants to use a great British brand like Vauxhall to sell cars and vans in the UK, then it has to make them here in the UK.”

Professor David Bailey, of the Birmingham Business School, is particularly worried over the future of the Vauxhall Ellesmere Port plant.

Bailey told the BBC that major cost cutting cannot come “without plant closures and significant job cuts”, expressing his concern that the Italian faction of Fiat Chrysler will prioritise keeping Fiat’s factories open in Europe, while the French state with its stake in PSA will make preserving automotive plants east of the Channel its main concern.

Bailey added: "I have a real fear that if this merger goes ahead the likes of Ellesmere Port, which is a very efficient plant, could be sacrificed to get the sort of savings the company is looking for, especially in all the uncertainty over Brexit.”

French Finance Minister Bruno Le Maire exacerbated these fears by saying that the French government would be “particularly vigilant” in “preserving the group’s industrial footprint in France” following the merger.

Le Maire added that the alliance would allow for the two groups to invest significantly in greener vehicles, something which Fiat Chrysler agrees with.

The firm has a longstanding belief that consolidation through global collaboration in the automotive sector is necessary to allow for investment in green vehicles by cutting costs. Indeed, it has already been in talks over a merger with Renault this year, before pulling out of the deal back in June.

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Authored by

Scott Challinor
Business Editor
October 31 2019

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