Peugeot agrees deal with General Motors to buy Vauxhall

. Credit: David Cheskin/PA
  • Video report by ITV News Business Editor Joel Hills

Peugeot-owner PSA Group has agreed a deal with General Motors (GM) to buy Opel and Vauxhall.

The £1.9 billion deal was announced ahead of a press conference in Paris on Monday and will see PSA become Europe's number two carmaker after Volkswagen.

The deal was hailed by PSA's CEO as "a game-changer" and GM chief Mary Barra said it was a "win" for both sides.

ITV News' Joel Hills reports that GM has taken a "massive write-down of up to 4.5 bn Euros" by agreeing the deal.

Concerns have also been raised in the run up to the deal about what would happen to Vauxhall's 35,000-strong UK workforce - made up of staff across manufacturing plants in Ellesmere Port, Luton, and the supply chain.

French car giant PSA tried to allay workers fears on Monday, with PSA CEO Carlos Tavares promising to keep existing GM commitments to workers.

He said that PSA had improved the efficiency of its Peugeot and Citroen models in the last few years without closing any plants.

Prime Minister Theresa May's official spokesman insisted "no specific assurances" had been given to Peugeot to secure the future of the UK plants.

  • Carlos Tavares is questioned by ITV News' Joel Hills over possible plant closures:

Mr Tavares said: "We do not need to shut down plants. We believe we need to trust the talents of people. They always come up with ideas and solutions we could not imagine. Shutting down plants is rather simplistic."

Responding to a question on the issue from ITV News business editor at a press conference in Paris, Mr Tavares reiterated there was "no need" to shut down plants, but indicated the decision was dependant on achieving efficiency "benchmarks".

Outside the press conference, Mr Tavares said he could not comment on whether Brexit would impact the plants.

He said: "We have implemented a successful turnaround by PSA and everything we have learned so far will be transferred to Opel and Vauxhall ... and regardless of the external factors they will be able to protect themselves through their performance."

  • Carlos Tavares is questioned by ITV News' Joel Hills over the possible effect of Brexit:

The PSA chief's assurances over workers' jobs was welcomed by Business Secretary Greg Clark, who said that "conversations" he and Prime Minister Theresa May had with company had led him to be "cautiously optimistic" that there would be no plant closures.

  • Business Secretary Greg Clark is 'cautiously optimistic':

In a statement, Mr Clark said: "Vauxhall has a long history of success in this country and we are determined to see that continue.

"The government welcomes the assurance by PSA that they will respect the commitments made by GM 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."

He reiterated these points in Parliament Monday afternoon, adding that the companies will be held to account over current agreements "extending to at least 2021".

Responding to Labour's Rebecca Long-Bailey question over pensions, he said he had discussed the topic "in detail and regularly" with GM and PSA.

He added: "They've given an absolute commitment that that no pensioner, current or prospective, will be worse off in any way."

Unite's general secretary, Len McCluskey, also confirmed initial discussions with the PSA Group "have been relatively positive" following a "nerve-racking" few weeks for workers.

But workers at the Ellesmere Port factory said the "uncertainty" continued to worry them.

According to the Labour MP for Ellesmere Port and Neston Justin Madders the commitment from Peugeot to workers will run until 2020/21.

PSA are being joined by French bank BNP Paribas in the purchase of GM Financial's European operations through the formation of a 50%-50% joint venture and the deal is expected to be completed at the end of this year.