Vauxhall owner to close Luton factory

The owner of Vauxhall has announced plans to close its van-making factory in Luton, putting about 1,100 jobs at risk.

Stellantis, which also owns brands including Citroen, Peugeot and Fiat, said it would combine its electric van production at its other UK plant in Ellesmere Port in Cheshire.

Rules imposed to speed up the transition to electric vehicles (EV) in the UK partly drove the decision, the firm said.

Union Unite said the move was a "complete slap in the face" for its members working in Luton.

There are growing concerns among car manufacturers over EV sales targets, with many, including Stellantis, calling for the government to do more to boost consumer demand.

Following the Luton plant announcement and intense pressure from industry leaders, Business Secretary Jonathan Reynolds said the government would consult on changes to EV sales rules, which is officially called the zero-emission vehicles mandate, because it is not working as intended.

"I get the seriousness and the urgency of the situation," he said, adding that the decision to close the Vauxhall van factory was a "difficult day for Luton".

Late on Tuesday, the car industry called for urgent government intervention "to safeguard the sector and Britain’s zero emission vehicle transition".

The Society of Motor Manufacturers and Traders (SMMT) said weak demand for EVs and the requirement to fulfill sales quotas would cost carmakers £6bn in 2024 alone, "with the potential for devastating impacts on business viability and jobs".

It said the strong EV demand anticipated when the zero emissions mandate was designed more than two years ago had failed to materialise, with interest rates, raw material prices, and energy costs remaining high.

However, Reynolds reaffirmed that the government remained committed to meeting Labour’s manifesto target of ending sales of new petrol and diesel cars by 2030.

As part of the shift to electric, manufacturers are currently required to sell a certain percentage of cars and vans that do not emit any emissions ahead of the 2030 ban, with quotas increasing each year.

Current rules state EVs must make up 22% of a carmaker's car sales, and 10% of van sales in 2024.

For every sale that pushes it outside the mandate, firms must pay a £15,000 fine. There are flexibilities in the system, allowing manufacturers who cannot meet the targets to buy "credits" from those that can.

But car brands with factories in the UK have been urging the government to relax the rules, arguing that EV demand is not strong enough and more incentives are required for drivers to go fully electric.

Stellantis's Vauxhall plant in Luton currently builds petrol and diesel vans and had been due to start making its medium-sized Vivaro electric van from 2025, before the decision to close it.

Electric models from other Stellantis brands, including Citroën, Peugeot and Fiat, were also set to be built there. Vauxhall's Luton director said at the time it would be a "fitting way" to mark the factory's 120th anniversary.

Now, the electric model that had been scheduled for manufacturing at Luton will move to Ellesmere Port, which is to get a £50m cash injection.

Three years ago, Stellantis invested £100m into revamping the Ellesmere Port site to make electric vehicles. It currently builds a range of small electric vans.

Production of Stellantis's conventional vans will be transferred to France

The company said the closure of Luton in spring next year would "potentially contribute to greater production efficiency". The decision to consolidate production is subject to consultation.

It said hundreds of permanent jobs would be created at Ellesmere Port and that it would provide relocation assistance to workers who wanted to transfer from Luton.

But Unite said "whatever the positive benefits" in store for the Ellesmere Port site, the decision was "not acceptable".

“We stand ready to support our members in doing whatever we can to ensure that historical vehicle manufacturing is maintained in Luton," the union said.

Luton's Vauxhall factory opened in 1905, with the first vans being assembled there in 1932.

At its height the plant employed 37,000 people, but that number has been falling since the 1960s. The final car rolled off the production line in 2002, though van manufacturing, with the production of the Vivaro model, continued.

Earlier this year, Stellantis chief executive Carlos Tavares warned that the future of both Luton and Ellesmere Port were in doubt, citing the impact of the EV sales mandate.

Nissan, which builds EVs at its plant in Sunderland, has said the EV sales rules are "undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment".

Last week, its rival Ford announced it will cut 800 jobs in the UK over the next three years. It said this was partly because of weaker demand for EVs.

The SMMT has previously said support packages and incentives are needed to make the electric vehicles switch more attractive and affordable.

Sales of electric cars have been increasing - in October, they made up nearly one out of every four cars registered. However, industry sources insist this is largely down to unsustainable discounting.

Mike Hawes, chief executive of the SMMT, said the industry did not want to "water down any commitments", but said "workable regulation - backed with incentives - will set us up for success".

The SMMT said Stellantis's announcement was a "major concern to UK automotive manufacturing but, most importantly, to the livelihoods of many".

The government said it was backing the car industry with more than £300m to "drive uptake of zero-emission vehicles".