French car maker PSA Group Monday announced its plans to slash 400 UK-based jobs, as it adjusts to a weaker car sales environment and weighs the impact of Brexit.
PSA Group shares were trading almost 1% higher around midday Monday.
The jobs are set to be cut from the firm’s Vauxhall manufacturing site in Ellesmere Port, north West England. That represents some 22% of that factory’s work-force.
A spokesman for PSA Group, who also manufactures Peugeot, Opel and Citroen, said its business is “facing challenging European market conditions”.
PSA Group became Europe’s second biggest carmaker this summer, following its purchase of GM’s European brands, Vauxhall and Opel. VW is the largest automaker in Europe.
The Ellesmere Port Vauxhall plant, is where the Astra model is manufactured. PSA Group said operating costs at that plant where higher than some others. It added that the decision to reduce its staff headcount ,was in response to slower car sales and an attempt to improve competitiveness.
Future plans rest on Brexit outcome
While the carmaker said the decision to cut 400 staff from the Vauxhall plant wasn’t due to Brexit, it did say that any future investment plans would be reliant on the outcome of Brexit negotiations.
Specifically, the new owners of Vauxhall said the type of cars made at Ellesmere port have become less popular recently, with SUV style cars proving to be more in demand. There are plans to design a next-generation Astra model in the 2020s. However, no decision on future investment in the Vauxhall plant would be taken while Brexit discussions were ongoing and remained uncertain.
"Once [PSA] has enough visibility on the future trading relationship with the EU, and the plant competitiveness has been addressed, the company will be in a position to consider future investments,” the carmaker said in a statement.
The decision to try and improve the Ellesmere Port plant’s competitiveness is a decision that could prove beneficial to the company in the future. But, right now, it’s a devastating blow to 400 workers.