Britain’s largest trade union is seeking assurances over about 2,600 manufacturing jobs at Vauxhall after the carmaker’s parent company, PSA, announced a £38bn (€45bn) merger with Fiat Chrysler that will create the world’s fourth-biggest carmaker.
Vauxhall’s workforce includes 1,100 staff at its Ellesmere Port plant in Wirral and around 1,500 people making the Vivaro van in Luton. PSA, which also owns Peugeot, and Fiat Chrysler confirmed there would be no plant closures as part of €3.7bn in cost savings targeted from the deal, but the Unite union immediately raised concerns.
“Unite will … be seeking guarantees about new investment to ensure that the company’s UK factories are able to continue to build high-quality cars and vans to meet the challenges of the transition to electric vehicles,” said Unite’s national officer Des Quinn.
David Bailey, a professor of business economics at Birmingham University, said question marks would remain given Fiat has Italian plants running at less than capacity.
“Both the French and Italian governments will be keen to maintain capacity in their respective countries, and that could leave UK plants vulnerable to the axe being swung down the line,” he said.
PSA had previously threatened to close the Cheshire plant if its operations were disrupted by Brexit.
PSA’s chief executive, Carlos Tavares, who had overseen the group’s successful integration and turnaround of the Vauxhall and Opel brands, will stay on as CEO of the new group, which will have combined annual sales of about 8.7m vehicles.
On the basis of 2018 sales, the companies would have revenues of almost €170bn and operating profits of €11bn. A new name is yet to be announced.
John Elkann, a scion of the Agnelli family, who controlled Fiat, will become the group’s chairman. The Agnelli family’s investment vehicle will have representation on the board, along with the Peugeot family and Bpifrance, the French state’s investment arm.
The 50-50 merger will create a new Franco-Italian-American powerhouse, domiciled in the Netherlands – a neutral location – but listed in Paris, Milan and New York. It will aim to give the combined group the financial firepower to invest in electric and autonomous vehicle technology to adjust to fundamental shifts in the car industry.
Cars sold by the new group will range from mass-market brands such as Peugeot’s Citroën, Opel and Vauxhall, through to premium and luxury marques such as Fiat Chrysler’s Alfa Romeo, Jeep and Maserati. The companies noted the group would be more balanced geographically – Peugeot has a big presence in Europe while Fiat Chrysler has a stronger North American offering.
Dongfeng Motor Group, the Chinese automaker that owns 12% of PSA, will sell part of its stake in a move seen as addressing US concerns over Chinese interest in a major American asset.
Tavares said: “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services.”
The merger is expected to be completed in about a year’s time. A proposed deal between Fiat Chrysler and PSA’s French rival Renault fell through in June. Fiat Chrysler said the French government’s opposition had prevented the Renault tie-up but it remained convinced of the need for consolidation, a strategy pushed by the late Fiat chief executive Sergio Marchionne.
Marchionne saw a need for car companies to band together as they approached the fundamental shift away from the internal combustion engine towards electric vehicles. At the same time, diesel sales have fallen dramatically since emissions-cheating scandals and concerns over air pollution emerged.
The new group will have to meet limits that will force it to reduce carbon dioxide emissions from the cars it sells from 1 January onwards, by selling a combination of battery electric cars and lower-emission petrol and diesels, as well as hybrids of the two.
