Stellantis Deciding Whether to Close U.K. Plant After Brexit

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Stellantis NV will decide in the coming days whether to close a car factory in the U.K. that has been in limbo since last year due to Brexit-related uncertainty.

The automaker is weighing three options for the plant in Ellesmere Port, England, according to people familiar with the matter. It either will invest in making a new version of the Vauxhall and Opel Astra compact car there, build a different model at the facility, or shut it down, said the people, who asked not to be identified because no decision has been made.

The site employing about 1,000 workers has emerged as an early test case for the U.K.’s carmaking prospects after the Brexit trade deal reached in late December. Stellantis Chief Executive Officer Carlos Tavares froze investment in the factory earlier in the year due to uncertainty about Britain’s future trading relationship with the European Union. While a crisis was avoided, the CEO has raised concerns about additional costs and bureaucracy, as well as Prime Minister Boris Johnson’s 2030 ban of combustion-engine cars.

“You put your investment close to the market where you sell the highest volume,” Tavares said in January. Given that, he asked rhetorically: “What is left for the U.K.?”

Stellantis may announce a decision as soon as Wednesday evening after meeting on the matter, according to a spokesman, who declined to comment further. The company also formed from the merger of PSA Group and Fiat Chrysler makes commercial vehicles at a factory in Luton, England. That plant’s future is secure, the people said.

After the U.K.’s passenger-vehicle production plunged to a 36-year low last year, automakers now face more onerous customs procedures and requirements to source higher portions of components locally to avoid tariffs. There’s scarce battery production in the country now, and Stellantis already has a 5 billion-euro ($6.1 billion) project to make them in France and Germany with oil giant Total SE.

“If you look at it from a pure logistic perspective or from a paperwork perspective, perhaps it’s better to put it in continental Europe,” Tavares said last month, referring to the company’s EV investments. “It depends also on the U.K. government’s willingness to protect some kind of automotive industry in its own country.”

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