Stellantis, the parent company of Citroen, Fiat, Peugeot and Vauxhall, has announced plans to close its van manufacturing plant in Luton. This move puts around 1,100 jobs in jeopardy.
The closure forms part of a strategic consolidation of Stellantis’s electric vehicle production within the UK, as operations move to the company’s Cheshire facility at Ellesmere Port.
Stellantis has stated that a key factor in the decision to close the plant is the UK’s Zero Emission Vehicle (ZEV) mandate. However, unions and industry experts are sceptical about the explanation.
Vauxhall has been producing cars at the Luton plant since 1905, with commercial vehicles first rolling off the production lines in 1932, starting with the ‘VYC’ and ‘VXC’ panel vans. In the intervening years, many Vauxhall commercial vehicles have been produced there, with the Vivaro being the most recent addition, alongside its Citroen, Fiat and Peugeot-badged twins. The Vivaro began production in 2001 and has recently undergone a significant refresh.
At its height, the factory employed almost 37,000 people from the local area, but that number has reduced significantly over the last few decades.
Unite, the trade union representing the Luton site workers, has been critical of the announcement, describing the proposed closure as a “complete slap in the face” for its members. It has called on the government to intervene: “Whatever the positive benefits this plan may have for Ellesmere Port, that is not acceptable. We stand ready to support our members in doing whatever we can to ensure that historical vehicle manufacturing is maintained in Luton and we call on the government to do the same.”
The Stellantis facility at Ellesmere Port, where the company plans to consolidate UK operations, already produces compact electric vans, such as the Citroen e-Berlingo and Vauxhall Combo Electric.
In 2021, the Cheshire facility received a £100 million investment to transform the plant into the UK’s first EV-only volume manufacturing plant. It is now set to receive another £50 million input to expand facilities to include the production of medium-sized electric vans.
Stellantis’s CEO Carlos Tavares had previously talked about the uncertain future that both the Luton and Ellesmere Port plants would face because of the ZEV mandate from the UK government, which requires manufacturers to ensure that 22% of car sales and 10% of van sales this year are EV’s, with substantial fines imposed for targets not met.
The mandate has come under fire from other industry leaders who have argued that with consumer demand flagging and a lack of government incentives available to reignite it, compliance with the mandate was increasingly challenging.
The Society of Motor Manufacturers and Traders, the organisation representing the UK’s motor industry, has also called for the government to assist as the industry struggles.
Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders: “Times have changed and not for the better. The cheaper raw materials have not come to pass. Nor the lower interest rates. Nor the cheaper energy. As a result, we now expect to sell 116,000 fewer electric vehicles this year than when the mandate was announced. No one wants that. Not us, not government, not the charging sector. They need EVs on the road, not a notional share of a constrained market. They need that reassurance to preserve their £6 billion investment to 2030. But the mandate could cost us around £6 billion this year alone.”
The government has pledged £300 million to support the automotive sector and help boost EV adoption. Business Secretary Jonathan Reynolds described the announcement of the Luton closure as a “difficult day for Luton.” A consultation has been promised to discuss potential changes to the ZEV mandate, but so far, no immediate solution has been offered for those workers impacted by the closure.
The Luton closure highlights larger challenges with transitioning from petrol and diesel to electric vehicles in the UK. EV car sales have grown, with nearly one in four vehicles registered in October falling into this category, but electric van sales accounted for just 7.9% of all light commercial vehicles for the same period. Industry insiders have argued that growth is not driven by robust customer demand but instead relies on unsustainable discounting.
The decision to close Luton is presented as an effort by Stellantis to achieve greater production efficiency within its organisation. The production of petrol and diesel vans, which is the focus of the Luton plant, will be transferred to France and to factories within the EU, where 75% of current production ends up.
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