Vauxhall workers should brace themselves for redundancy

Vauxhall workers should be braced for redundancies following the sale of the business to French manufacturer PSA, a West Midlands motor industry expert has said.

Christian Stadler is a Professor of Strategic Management at Warwick Business School and researches the car industry.

He said: “I would expect job cuts. PSA has done it before and there is no other way to realistically achieve the cost savings they have in mind, which might possibly mean plant closures as well. Whether this is a Vauxhaul/Opel plant or a Peugeot plant is hard to say at the moment.

“The UK is definitely in a bad position as Brexit makes it less competitive than Germany and the unions are stronger in Germany.

“GM has been losing money in Europe since 2000. Last year they would have made a profit but the devaluation of the pound following Brexit caused another loss.”

He said GM had considered a deal with Magna (backed by Sberbank) back in 2009 during the depths of recession but had pulled back as it considered Opel important for its small car technology.

However, this has changed, he added.

“Firstly, because small cars don’t sell well in the US at the moment and secondly, the joint venture with Shanghai Automotive Industry Corporation in China also facilitates small car technology development,” said Prof Stadler.

“GM can now concentrate on the US and Asian markets – which is sensible. While PSA can now become number two in Europe with a 17% market share.

“Scale matters, particularly for mass market producers. It means that PSA can spread its R&D costs over a larger group and this should be helpful considering the substantial shifts the industry is experiencing in such areas as e-vehicles and self-driving cars.”

He said PSA had a track record of turning around loss-making mass market producers and its margins above 6% were impressive for a mass market producer.

“It expects to make savings of € 1.7bn, though it pays to be cautious about such figures as they tend to be too optimistic at deal time.

“PSA, however, has been a successful cost-cutter in the past and, unlike GM, the PSA management has a good sense of how to deal with European unions,” he added.