Vauxhall owner Stellantis to close Luton plant putting 1,100 jobs at risk

The proprietor of Vauxhall has introduced plans to shut its van-making manufacturing unit in Luton, placing about 1,100 jobs in danger.

Stellantis, which additionally owns manufacturers together with Citroen, Peugeot and Fiat, mentioned it might mix its electrical van manufacturing at its different UK plant in Ellesmere Port in Cheshire.

Guidelines imposed to hurry up the transition to electrical automobiles (EV) within the UK partly drove the choice, the agency mentioned.

Union Unite mentioned the transfer was a “full slap within the face” for its members working in Luton.

There are rising issues amongst automotive producers over EV gross sales targets, with many, together with Stellantis, calling for the federal government to do extra to spice up client demand.

Following the Luton plant announcement and intense stress from trade leaders, Enterprise Secretary Jonathan Reynolds mentioned the federal government would seek the advice of on modifications to EV gross sales guidelines, which is formally referred to as the zero-emission automobiles mandate, as a result of it was not working as anticipated.

“I get the seriousness and the urgency of the scenario,” he mentioned, including that the choice to shut the Vauxhall van manufacturing unit was a “troublesome day for Luton”.

As a part of the shift to electrical, producers are required to promote a sure proportion of automobiles and vans that don’t emit any emissions.

Present guidelines state EVs should make up 22% of a carmaker’s automotive gross sales, and 10% of van gross sales this 12 months.

For each sale that pushes it exterior the mandate, corporations should pay a £15,000 wonderful. There are flexibilities within the system, permitting producers who can’t meet the targets to purchase “credit” from these that may.

However automotive manufacturers with factories within the UK have been urging the federal government to chill out the foundations, arguing that EV demand will not be sturdy sufficient and extra incentives are required for drivers to go absolutely electrical.

Late on Tuesday, the trade referred to as for pressing authorities intervention “to safeguard the sector and Britain’s zero emission car transition”.

The Society of Motor Producers and Merchants (SMMT) mentioned weak demand for EVs and the requirement to meet gross sales quotas would price carmakers £6bn in 2024 alone, “with the potential for devastating impacts on enterprise viability and jobs”.

It mentioned the sturdy EV demand anticipated when the zero emissions mandate was designed greater than two years in the past had did not materialise, with rates of interest, uncooked materials costs, and vitality prices remaining excessive.

Stellantis’s Vauxhall plant in Luton presently builds petrol and diesel vans and had been resulting from begin making its medium-sized Vivaro electrical van from 2025, earlier than the choice to shut it.

Electrical fashions from different Stellantis manufacturers, together with Citroën, Peugeot and Fiat, had been additionally set to be constructed there. Vauxhall’s Luton director said at the time it would be a “fitting way” to mark the factory’s 120th anniversary.

Now, the electrical mannequin that had been scheduled for manufacturing at Luton will transfer to Ellesmere Port, which is to get a £50m money injection.

Three years in the past, Stellantis invested £100m into revamping the Ellesmere Port web site to make electrical automobiles. It presently builds a spread of small electrical vans.

Manufacturing of Stellantis’s standard vans might be transferred to France

The corporate mentioned the closure of Luton in spring subsequent 12 months would “doubtlessly contribute to better manufacturing effectivity”. The choice to consolidate manufacturing is topic to session.

It mentioned a whole lot of everlasting jobs can be created at Ellesmere Port and that it might present relocation help to staff who needed to switch from Luton.

However Unite mentioned “regardless of the optimistic advantages” in retailer for the Ellesmere Port web site, the choice was “not acceptable”.

“We stand able to help our members in doing no matter we will to make sure that historic car manufacturing is maintained in Luton and we name on the federal government to do the identical,” the union mentioned.

Luton’s Vauxhall manufacturing unit opened in 1905, with the primary vans being assembled there in 1932.

At its peak the plant employed 37,000 folks, however that quantity has been falling because the Nineteen Sixties. The ultimate automotive rolled off the manufacturing line in 2002, although van manufacturing, with the manufacturing of the Vivaro mannequin, continued.

Earlier this 12 months, Stellantis chief govt Carlos Tavares warned that the future of both Luton and Ellesmere Port were in doubt, citing the influence of the EV gross sales mandate.

The automotive trade as an entire has been repeatedly demanding the federal government present higher incentives for folks to purchase electrical, forward of the ban of gross sales of recent petrol and diesel automobiles commencing in 2030.

Nissan, which builds EVs at its plant in Sunderland, has mentioned the foundations are “undermining the enterprise case for manufacturing automobiles within the UK, and the viability of 1000’s of jobs and billions of kilos in funding”.

Final week, its rival Ford announced it will cut 800 jobs in the UK over the next three years. It mentioned this was partly due to weaker demand for EVs.

The SMMT has beforehand mentioned help packages are wanted to make the electrical automobiles change extra engaging and inexpensive.

Gross sales of electrical automobiles have been growing – in October, they made up almost one out of each 4 automobiles registered. Nonetheless, trade sources insist that is largely right down to unsustainable discounting.

Mike Hawes, chief govt of the SMMT, mentioned the trade didn’t need to “water down any commitments”, however mentioned “workable regulation – backed with incentives – will set us up for fulfillment”.

The SMMT mentioned Stellantis’s announcement was a “main concern to UK automotive manufacturing however, most significantly, to the livelihoods of many”.

The federal government mentioned it was backing the automotive trade with greater than £300m to “drive uptake of zero-emission automobiles”.