PSA Ponders Fate of Astra Production in U.K.

PSA Group is expected to decide by year-end whether to continue making the Vauxhall Astra hatchback in England or move the production to Europe in 2021, the Financial Times says.

The decision will hinge upon how the U.K. resolves its exit from the EU. If the result is higher tariffs on British-built cars and components, cars destined for the mainland would be less expensive to make there rather than in England.

PSA acquired Opel/Vauxhall from General Motors Co. at the end of July. The French carmaker has pledged to preserve jobs at all Opel and Vauxhall facilities. But the company also says it will review its production plans when current models are replaced.

The next-generation Astra is due in 2021. The new model will share its chassis with PSA’s redesigned Peugeot 308 sedan. The current 308 is being assembled at two French PSA factories, in Mulhouse and Sochaux.

FT notes that the Ellesmere Port plant that makes Vauxhall’s Astra in England is operating at only 63% of capacity, well below the 80%-plus level needed to be profitable. Opel also makes the Astra at a factory in Gliwice, Poland, that is operating at 97% of capacity.

Analysts opine that PSA is likely to consolidate Astra and Peugeot 308 production at its three European factories. FT says some observers have suggested the English plant become a hub to make right-hand-drive versions of multiple PSA models for the British market. But the newspaper says the volumes involved would further reduce capacity utilization at the Ellesmere Port facility.