Does it really matter who owns Vauxhall?
06 March 2017
Reaction to the purchase of GM’s European operations by the French company that owns Peugeot and Citroen (Group PSA) have been vocal.
General Motors (GM) who are exiting the UK has been producing cars in the UK for over 90 years so the move is certainly of historic significance, but perhaps its key currency is in highlighting one of the many fault lines around Brexit. In a debate that has been high on rhetoric, but low on content, the car industry has provided a key lens to understanding how multinational companies will react to Britain’s EU withdrawal and the response of large scale multinationals.
The deal follows on from a trickle of nervous commentary that has followed the reassuring investment decision of Nissan last year.
The reason why the Nissan question was significant is that it provided analysts with something concrete to actually analyse − in that case a Brexit that neutralizes the impact on the car industry. However, the rumblings of the universally non-UK owned firms operating plants in the UK, and the reduction in production by Ford in particular, has made commentators nervous about whether production levels will be sustained in the UK. Because cars can be assembled in multiple locations there is an apparent risk that PSA’s acquisition will put jobs at risk. And the success of Nissan in obtaining a direct intervention from the PM herself has ultimately put pressure to on the government to provide similar reassurance to others.
But does it really matter who owns Vauxhall as long as production remains in the UK?
After all, it is important not to conflate this commercial decision with Brexit per se. A more important guide to the future perhaps comes from PSA having closed operations before shifting its production to continental Europe in 2006. PSA shows that it is willing and able to relocate its production to align to its commercial imperatives. However, PSA are no different from other car manufactures who are already on record in recording their disquiet. And while none have suggested wholesale exit, Ford illustrated the more likely trend going forward by opting to reduce their UK production. The mood music suggests that unless the government is able to neutralize the impact of Brexit as it did with Nissan, there will be a steady deindustrialisation by stealth with large multinational firms maintaining reduced presence.