PSA Group says there could be significant opportunities for the UK supply chain following its proposed purchase of General Motors‘ Opel/Vauxhall division, if the British government opts for a so-called ‘hard’ Brexit.
Much debate is currently swirling around which option the UK could take, with British Prime Minister, Theresa May previously calling for a “tariff free and frictionless trade” environment coupled with so-far unspecified Single Market “arrangements” for the automotive sector.
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But speaking in Paris this morning (6 March), PSA chairman, Carlos Tavares outlined a scenario where both exit solutions could be of benefit, particularly to the British supply chain.
“Brexit is interesting because nobody knows how it will unfold – it could be hard or soft, said the PSA chief. “If soft, it is good on [for] performance to be competitive in the UK against all other countries, strengthened maybe by the weakness of the pound.
“If it is a hard Brexit, in terms of strategy, it is a very good opportunity to source the UK from inside the UK. We can source parts from the UK so that cost will be more in pounds as [like] the revenue structure.
“If it is a hard Brexit the supplier base needs to be developed and this is something the UK government completely understands. Our advantage will be to have UK plants with a pound cost structure to supply a market where the market is in pounds.”
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By GlobalDataHowever, some thinking behind Tavares’ preference may be gauged from his comments adding the market would be in “a better shape” if the UK opts for a soft Brexit.
PSA will purchase Opel/Vauxhall from GM for EUR2.2bn (US$2.3bn), subject to regulatory approval.
With the addition of Opel/Vauxhall, which generated revenue of EUR17.7bn in 2016, PSA will become the second-largest automotive company in Europe, with a 17% market share.
