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AUTOMOTIVE DECODED

Previous edition: 27 Nov 2024
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STELLANTIS PLANS TO CLOSE LUTON PLANT IN UK

Stellantis, owner of the Vauxhall brand in the UK, has announced it will close
its vehicle manufacturing plant at Luton – where Vauxhall has been making
vehicles since 1905.

The plant currently employs around 1,100 workers and makes combustion engined
light commercial vehicles (LCVs). It had been due to start production of an
electric version of the Vivaro commercial van in 2025.

Stellantis acquired the Luton plant when it purchased General Motors' European
assets and the Opel/Vauxhall brands in 2021.

Stellantis said it will now consolidate its UK manufacturing footprint alongside
new investment (GBP50m) ‘to enhance Ellesmere Port's mission as the UK's
sustainable, EV-only volume manufacturing plant’.

The company also said a consultation has been launched with employees and union
partners on the plan to complement existing small electric light commercial
vehicles (LCV) in Ellesmere Port with battery-electric medium LCVs (K0),
transferred from the Luton plant. It also said a comprehensive support plan for
impacted employees in Luton, including hundreds of jobs to be relocated to the
Ellesmere Port manufacturing site, will be made available with dedicated job
support ‘within the very dynamic Luton area, where new third-party activities
could be considered’.

Stellantis said its plan has been made ‘within the context of the UK’s ZEV
Mandate’. The UK Government’s Zero Emission Vehicle (ZEV) Mandate, which targets
EV share numbers and will fine OEMs for non-compliance has met strong opposition
from the UK’s auto industry as EV sales have undershot expectations.

A UK Government spokesperson said: “While it’s encouraging to see Stellantis
investing in the future of its Ellesmere Port plant, we know this will be a
concerning time for the families of employees at Luton who may be affected.

“We have a longstanding partnership with Stellantis and we will continue to work
closely with them, as well as trade unions and local partners on the next steps
of their proposals.

“The government is also backing the wider industry with over £300 million to
drive uptake of zero emission vehicles and £2 billion to support the transition
of domestic manufacturing."

A labour union (Unite) spokesperson described the Stellantis proposal as a 'slap
in the face' for its Luton members. "The proposal that has been tabled today has
been a complete slap in face for our members in Luton, where Vauxhall vehicles
have been manufactured for 120 years. Whatever the positive benefits this plan
may have for Ellesmere Port, that is not acceptable.

"We stand ready to support our members in doing whatever we can to ensure that
historical vehicle manufacturing is maintained in Luton and we call on the
government to do the same."

UK ZEV Mandate concerns as BEV sales slow

Stellantis warned earlier this year that it may have to halt production in
Britain unless the government does more to boost demand for electric vehicles
(EV).   

Carmakers in the UK are increasingly concerned that they will incur huge fines
on missed EV targets under the UK Government’s Zero Emission Vehicle (ZEV)
mandate.

While BEV car sales in the UK have reached almost 300,000 in the first ten
months, that represents 18.1% of the market – an increase on 2023, but still
significantly short of the 22% target for this year (and of the 28% which must
be achieved in 2025) under the UK Government’s ZEV mandate.

Manufacturers that fail to meet the compliance levels or do not sell enough ZEVs
face penalties of GBP15,000 (USD20,000) for every non-ZEV unit sold over their
mandated allowance.

The SMMT – the UK auto industry’s trade association – recently held a meeting
with UK ministers to discuss the issue of the Zero Emission Vehicle Mandate. The
ZEV Mandate was created by the last UK Government and came into law in January
2024.

The SMMT stressed the potential negative impact of the ZEV Mandate on the UK’s
attractiveness as an investment location. The industry is also coming under
pressure from slowing demand for BEVs and manufacturers are having to discount
BEVs in the UK in order to raise sales to avoid fines.

The Luton news comes amid a backdrop of industrial restructuring fears as BEV
sales undershoot targets more generally. Ford has just announced 4,000 job cuts
in Europe – including 800 for the UK.

Ellesmere Port 'all-electric hub'

Amid the bad news for Luton, Stellantis has stressed its investment plan for its
Ellesmere Port plant in northwest England.

Stellantis said that Ellesmere Port is proposed as the new all-electric UK LCV
hub to take advantage of UK employees' expertise on the new line, the site’s
footprint and proximity to the Green Automotive Hub located at the adjacent
Queen Elizabeth II Eastham docks and the recently constructed 59,500m²
Stellantis UK parts distribution centre.

In 2021, Stellantis invested £100 million in Ellesmere Port to transform the
facility to battery-electric LCV production, making it the first battery
electric vehicle-dedicated plant globally for Stellantis.  Ellesmere Port is
currently an EV-only manufacturing facility building the company’s small LCV
range of Citroën ë-Berlingo, Vauxhall Combo Electric, Opel Combo Electric,
Peugeot E-Partner and Fiat Professional E-Doblo.

The company says it has transformed Ellesmere Port plant with a new body shop,
upgraded general assembly, a compression of the site area and the creation of an
on-site battery pack assembly.  In addition, Stellantis says there is further
support to enable a pathway to carbon neutrality for the plant later this decade
and the plant aims to be 100% self-sufficient for electricity.

Relocation support for Luton employees

Whilst strengthening Ellesmere Port as its sustainable LCV hub in the UK with
the transfer of Luton operations, Stellantis said it remains committed to acting
responsibly toward its employees in Luton and, if the company proposal is
approved, will offer relocation support to facilitate employees wishing to
transfer to the Ellesmere Port site with an attractive package, where ‘hundreds
of permanent jobs will be created’. Dedicated comprehensive job support,
including opportunities for retraining, for all employees affected will also be
implemented in the very active Luton area, just one mile from the international
airport.  At the same time, Stellantis said it will work with local government
and local employers to identify new employment opportunities within the Luton
area for Stellantis employees who might be impacted by this proposal if it goes
ahead.






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