Stellantis to close Vauxhall van factory in Luton, affecting 1,100 jobs

Stellantis, the parent company of Vauxhall and owner of brands including Citroen, Peugeot, and Fiat, has announced its decision to close its van manufacturing factory in Luton. This move places approximately 1,100 jobs at risk. The company stated its intention to consolidate its electric van production at its other UK facility, located in Ellesmere Port, Cheshire. The company indicated that regulations enacted to hasten the UK’s transition to electric vehicles (EVs) partially influenced this decision. In response, the Unite union characterized the action as a “complete slap in the face” for its members working in Luton. Car manufacturers are expressing increasing apprehension regarding EV sales targets, with many, including Stellantis, advocating for greater government intervention to stimulate consumer demand. Following the announcement concerning the Luton plant and considerable pressure from industry leaders, Business Secretary Jonathan Reynolds indicated that the government would consult on revisions to the EV sales rules, officially termed the zero-emission vehicles mandate, because it is “not working as intended.” Reynolds commented, “I get the seriousness and the urgency of the situation,” and further described the decision to close the Vauxhall van factory as a “difficult day for Luton.” Late on Tuesday, the automotive industry issued a call for urgent government intervention “to safeguard the sector and Britain’s zero emission vehicle transition.” The Society of Motor Manufacturers and Traders (SMMT) stated that the combination of weak demand for electric vehicles and the necessity to meet sales quotas would cost carmakers £6bn in 2024 alone, “with the potential for devastating impacts on business viability and jobs.” The SMMT added that the robust EV demand predicted when the zero emissions mandate was devised over two years ago had not materialized, with interest rates, raw material prices, and energy costs remaining high. Despite these concerns, Reynolds reaffirmed the government’s commitment to achieving Labour’s manifesto target of ending sales of new petrol and diesel cars by 2030. As part of this transition to electric, manufacturers are currently obliged to sell a specific percentage of cars and vans that produce no emissions before the 2030 ban, with these quotas increasing each year. Current regulations mandate that electric vehicles must account for 22% of a carmaker’s car sales and 10% of van sales in 2024. For each sale exceeding the mandate’s allowance, companies are subject to a £15,000 fine. The system includes provisions for flexibility, permitting manufacturers who cannot achieve the targets to acquire “credits” from those that can. Nevertheless, car brands with manufacturing facilities in the UK have been advocating for the government to relax these rules, asserting that EV demand is not robust enough and that more incentives are needed for drivers to transition to fully electric vehicles. Stellantis’s Vauxhall plant in Luton currently produces petrol and diesel vans and was slated to begin manufacturing its medium-sized Vivaro electric van from 2025, before the decision to close the facility. Electric models from other Stellantis brands, including Citroën, Peugeot, and Fiat, were also planned for production there. Vauxhall’s Luton director had previously commented that this would be a “fitting way” to celebrate the factory’s 120th anniversary. The electric model previously scheduled for production at Luton will now be transferred to Ellesmere Port, which is slated to receive a £50m cash injection. Three years ago, Stellantis invested £100m in upgrading the Ellesmere Port site for electric vehicle manufacturing. The plant currently produces a range of small electric vans. The production of Stellantis’s conventional vans will be relocated to France. The company indicated that the closure of the Luton plant in spring next year could “potentially contribute to greater production efficiency.” This decision regarding production consolidation is subject to consultation. Stellantis stated that hundreds of permanent jobs would be created at Ellesmere Port and that it would offer relocation assistance to workers from Luton who wished to transfer. However, Unite asserted that “whatever the positive benefits” for the Ellesmere Port site, the decision was “not acceptable.” The union stated, “We stand ready to support our members in doing whatever we can to ensure that historical vehicle manufacturing is maintained in Luton.” The Vauxhall factory in Luton, which opened in 1905, began assembling its first vans in 1932. At its peak, the plant employed 37,000 individuals, a number that has been decreasing since the 1960s. The final car left the production line in 2002, though van manufacturing, including the Vivaro model, continued. Earlier this year, Stellantis chief executive Carlos Tavares had expressed doubts about the future of both the Luton and Ellesmere Port facilities, citing the influence of the EV sales mandate. Nissan, which produces EVs at its Sunderland plant, has also asserted that 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, Ford, a competitor, revealed its intention to reduce 800 jobs in the UK over the next three years, citing weaker demand for EVs as a partial reason. The SMMT has previously stated that support packages and incentives are required to make the shift to electric vehicles more appealing and affordable. While electric car sales have been increasing, representing one out of every five cars registered in October, industry sources contend that this trend is largely attributable to unsustainable discounting. Mike Hawes, chief executive of the SMMT, stated that the industry did not wish to “water down any commitments,” but stressed that “workable regulation – backed with incentives – will set us up for success.” The SMMT further described Stellantis’s announcement as a “major concern to UK automotive manufacturing but, most importantly, to the livelihoods of many.” The government stated its support for the car industry, providing over £300m to “drive uptake of zero-emission vehicles.”