Vauxhall calls for showrooms to open as plant restarts

Helen Thomas
Newsnight business editor
@helentbbcon Twitter

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A Vauxhall logoImage source, Reuters
Image caption,
As Vauxhall's Luton plant plans to restart operations, the car industry is facing an uncertain outlook

Vauxhall will restart production at its Luton plant on Monday but is calling for showrooms to open to speed up the automotive sector's recovery.

Managing director Stephen Norman told BBC Newsnight that the plant, which produces vans, would start up with only a third of its 1,600-strong workforce.

The company's Ellesmere Port plant, which makes cars, remains closed.

Mr Norman said the car industry needed new orders from showrooms to justify ramping up production.

Most of the new vans produced at Luton are likely to be exported to Europe, where some showrooms have reopened, he added.

"We need to have orders for the vehicles we're setting out to produce," said Mr Norman. "And the key blocking point that we have today as we speak is the opening of car dealerships in the United Kingdom... In fact, we'd like that to happen today and certainly at the latest at the end of this week."

The government has suggested that car showrooms could reopen from the beginning of June, depending on how the spread of Covid19 progresses.

It also said that, from today, showrooms could operate a click and collect service for taking receipt of ordered vehicles.

Of Ellesmere Port's continued closure, Mr Norman said: "It's not a technical issue. It can open as soon as the demand from the United Kingdom market... but also from across the continent [is there]."

Groupe PSA, Vauxhall's parent company which also owns Peugeot, Citroën and DS, employs about 5,500 people in the UK, 90% of whom have been placed in the government's furlough scheme.

At Luton, Mr Norman said that the company expected to add a second shift of workers within weeks but it would take much longer to get back to its full capacity, producing 100,000 vehicles a year.

He said redundancies were "absolutely not something that we are examining today."

Demand for vans has been a relative bright spot in the automotive market, which has ground to a halt during lockdown. Registrations for new light commercial vehicles fell 86% in April, compared to a year before, compared with a 97% slump for new cars.

Uncertain outlook ahead

The car industry is facing an uncertain outlook, with global sales forecast to drop by 20-25% this year. Vauxhall's plans to restart come as other car companies like Toyota and Bentley begin production, after closing their operations in late March.

When production restarts next week, all staff at the Luton plant will be subject to regular temperature checks and be required to wear a mask and goggles for work, as well as observing social distancing rules. Vauxhall will allow one hour when shifts change over to clean and to ensure different team do not interact.

The plant has reduced the processes that require people to work within 2 metres of each other from 150 to 50.

Groupe PSA staff will also wear masks and goggles in the company's showrooms, where it has put in 2 metre markings on the floor and introduced measures to limit numbers. It will be able to offer test drives, with a member of staff sitting in the back seat.

Image source, PA Wire
Image caption,
Production is set to begin at Vauxhall's Luton plant next week

Alison Jones, managing director of Peugeot, Citroën and DS, told Newsnight that the company had some pent-up demand from customers who had placed their orders before lockdown.

But she said it could take some time for demand to recover to its level before the pandemic: "In reality, with all the variables going on in the economic environment, we do not expect to see [demand] come back until Q4, Q1 of next year. We have to be realistic about the variables and what is happening out there in the economy," she said.

The company has spoken to the government about introducing new incentives for car buying, with the cost equally shared between the industry and government, Ms Jones said. The incentives would be linked to purchases of lower-emitting vehicles, including battery electric vehicles and plug-in hybrids.

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