The French firm that owns Peugeot and Citreon has agreed to a 2.2bn euro (£1.9bn) deal to buy General Motors’ European car unit, including the Vauxhall and Opel brands.

The combined company, PSA Group, will become the second largest car manufacturer in Europe, behind Volkswagen.

GM Europe has failed to make a profit since 1999, and the deal has raised fears of job losses at the Vauxhall factories at Ellesmere Port and Luton, which currently employ about 4,500 people.

In a statement, Carlos Tavares, chairman of PSA’s managing board, said:

“We are confident that the Opel/Vauxhall turnaround will significantly accelerate with our support, while respecting the commitments made by GM to the Opel/Vauxhall employees.”

Commenting on the deal and the possible future of car manufacturing in the UK, Unite general secretary Len McCluskey said:

“I am determined that we can convince the new boss, Mr Tavares, that it makes sense for him to continue to build in Britain. Our plants are the most productive in the European operation, the brand is strong here, the market for the products is here, so the cars must be made here.

“But there is also a role for the government to play. The uncertainty caused by Brexit is harming the UK auto sector. Wednesday’s Budget is a perfect opportunity for the government to make is clear that it will preserve our trading arrangements and that it will invest for our auto sector’s future now, beginning with assistance for the reshoring of components.

“We need every assistance from the government to give this sector a fighting chance. That absolutely includes committing now to securing access to the single market and customs union. This is the signal that the car industry needs in order to know that the UK government values this sector.”

The UK’s car industry could become one of the nation’s biggest losers from Brexit, with Nissan already reviewing the competitiveness of its Sunderland plant and BMW announcing the new electric Mini would not be built in the UK.

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