Future of one of two Vauxhall plants in UK secured

The Vivaro has been built in Luton since 2001. It has been a sales success for Vauxhall and Opel, with a record 15,587 sold in Europe last year - up from 12,376 in 2016. The Vivaro shares a platform with the Renault Trafic as part of a joint venture. Today’s announcement ends that deal, with Tavares understood to be keen to cut ties with its rival French car maker. 

Instead, the new Vivaro, to be built at the plant from 2019, will use the same EMP2 PSA Group platform which is used on rival vans, the Citroen Dispatch and Peugeot Expert. PSA sold 476,500 light commercial vehicles in 2017, a figure that rises to 658,000 when passenger car derivatives (such as the Peugeot Traveller) are included.

The PSA announcement states that EMP2 production will be localised by mid-2019, using both the Luton site and the PSA facility at Hordain in France. Tavares confirmed to Autocar that the Citroen Dispatch and Peugeot Expert will be built in Luton alongside the Vivaro, starting in 2019.

In a statement, Renault said it had reached "mutual agreement" with PSA to end the Vivaro/Trafic joint venture. It added: "The impact on Groupe Renault manufacturing plants is very limited. These plants will still be running at a high level of activity to support Groupe Renault's sustainable growth as outlined in the 'Drive the Future' mid-term business plan."

Renault also confirmed its deal to produce the Vauxhall/Opel Movano - based on the Renault Master - at its Batilly plant in France remains in place. 

Government: Luton decision a 'vote of confidence'

Greg Clark, the Secretary of State for Business, Energy and Industrial Strategy, also attended the announcement, in which it was revealed that the Government was contributing financially to the plant’s growth. It is an important investment for the Government demonstrating its commitment to UK manufacturing in the wake of Brexit.  

Clark said: "Today's decision is a vote of confidence in Vauxhall's high-skilled workforce and the UK's world-leading automotive sector. This investment in upgrading the production platform will safeguard and grow jobs, ensuring the future of the Luton plant well into the next decade and help ensure the plant is well positioned for future Vauxhall models to be made in the UK."

The confirmation of the new model will also be a boon for the Government amid concerns that car makers may cut jobs and move production away from the UK as it leaves the EU.

Around 75% of the vans produced at Luton are currently exported. Clark added: "We are absolutely clear of the central requirements to maintain access to markets that have been very successful for exporting. That means trade that is tariff free and without friction."

However, Tavares did raise Brexit during his speech. He said: "Brexit remains a concern for our business. The recent clarity helped us move towards transition a bit more confidently, but there is still more to be done to ensure frictionless trade."

Ellesmere Port decision due by 2020

Today’s news ends concerns about its Luton plant, but the efficiency of Ellesmere Port remains in doubt, with Tavares saying a decision needs to be made on its future within the next three years. While Luton has proved itself to be efficient enough for PSA’s factory empire, Ellesmere Port is understood to be trying to reduce its manufacturing costs for the Astra so it can prove its case when the next generation of the compact model is due early next decade.

Last month, PSA boss Carlos Tavares said Ellesmore Port must close the cost and quality gap between it and its European equivalents to survive. Speaking today, he said: "The current Astra launches in 2016, and the lifecycle is seven years, so ends in 2023. The decision [on Ellesmere Port] needs to be made three years ahead, which is 2020 - so let's meet in 2020.

"We are lucky because we need to catch up all the productivity that was not done during the past 20 years. While everybody is waiting for Brexit we are trying to rebuild productivity of the plant by 2020. At that time we'll have the answer - and it will be the perfect time, because we will know the outcome of Brexit."

PSA's £1.9bn buyout of General Motor’s Opel/Vauxhall subsidiary and GM Financial’s European operation, valued at £1.2bn and £800m respectively, was completed last summer.  The move made PSA the second biggest-selling car group in Europe after Volkswagen. Enlarged PSA now has a 17% share of the European market.