Vauxhall and Opel sold to Peugeot owner PSA in £1.9bn deal

(c) Sky News 2017: <a href="">Vauxhall and Opel sold to Peugeot owner PSA in £1.9bn deal</a>

The company behind Peugeot (Other OTC: PUGOF - news) has moved to allay fears that its €2.2bn (£1.9bn) deal to buy the Opel and Vauxhall brands from General Motors Europe will result in job losses or even factory closures.

PSA's statement said it intended to manage the group - the second largest in Europe with a 17% market share - by honouring existing commitments to workers.

Vauxhall employs 4,500 staff between its two major sites - at Ellesmere Port, which makes the Astra, and Luton, where the Vivaro van is produced.

Both plants have production contracts that are due to run to 2021 and 2025 respectively.

But while PSA signalled a medium-term commitment to the workforce, it said future investment would be dependent on "performance".

GM Europe has not made an annual profit since 1999, something PSA said would change.

Its profit push would be aided, the French firm said, by annual cost savings of around £1.5bn - to be achieved across the enlarged business - by 2026, with the bulk of them likely by 2020.

There are fears the Brexit vote could make the UK plants, currently the most efficient in Europe, less competitive through new trade arrangements. The bulk of Opel's production is in Germany.

Carlos Tavares, chairman of PSA's managing board, said of the company's workforce: "They understand that their future is in their hands based on their ability to give themselves the level of performance that will ensure the sustainability of their company."

The Business Secretary Greg Clark said in response: "The Government welcomes the assurance by PSA that they will respect the commitments made by GM (NYSE: GM - news) to Vauxhall's employees and pensioners.

"We will continue to engage and work with PSA in the weeks and months ahead to ensure these assurances are kept and will build on the success of both sites for the long term."

GM Europe said it believed the deal was in the workers' best interests.

Its boss, Mary Barra, said: "We believe this new chapter puts Opel and Vauxhall in an even stronger position for the long term and we look forward to our participation in the future success and strong value-creation potential of PSA through our economic interest and continued collaboration on current and exciting new projects."

Mike Hawes, chief executive of UK car industry body SMMT, said: "The UK is a competitive player in the automotive industry thanks to its rich heritage, record levels of productivity, skilled workforce and strong collaboration with government.

"The outlook for vehicle production remains positive with investment commitments made over the past few years still delivering growth.

"We are hopeful that this deal will provide a positive future for the plants at Luton and Ellesmere Port and the wider supply chain given their inherent advantages.

"We have been encouraged by the active role Government has played reassuring investors of its determination to safeguard our competitiveness despite the uncertainty of Brexit."

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