Peugeot sales surge as union boycott flops

The boycott, launched with a fanfare at the start of June with full-page newspaper adverts, urges the public to "think of England" if they intend buying a new car this summer. The Amicus union began the campaign after Peugeot bosses refused to reconsider their decision to close Ryton next year with the loss of 2,300 jobs.

However, the latest figures show sales of Peugeot models rose 17 per cent last month to 12,675, buoyed by the launch of the new 207 model, despite a 4 per cent decline in the overall new car market.

Peugeot's vice-president of strategy, Jean-Marc Nicolle, said that the union boycott was unjustified and, if successful, could only threaten the 5,000 other UK jobs the company provided in dealerships, parts suppliers and at head office.

Amicus hit back by accusing Peugeot of refusing to give serious consideration to its alternative plan for Ryton and claiming the French company was attempting to "fast-track" the plant's closure by tempting workers with an additional £4,000 on top of the normal redundancy package.

Ryton, which makes the ageing 206 model, will go down from two shifts to one from next Monday, and union officials fear Peugeot could close it altogether as early as October.

Roger Madison, Amicus's national officer for the car industry, said that the boycott campaign would run throughout the summer in an attempt to hit Peugeot's sales in the all-important month of September when the new number plate prefix comes in.

Peugeot said it has received 1,500 applications for the 1,000 redundancies that will result from the ending of the second shift as from this week. The generous packages are worth £45,000 to an assembly line worker with 15 years' service. Employees are also being offered the opportunity to buy their company cars at a one-third discount.

The union's survival plan for Ryton involves keeping it ticking over on one shift until 2010 when production of a new small car, codenamed the A58, begins. However, Mr Nicolle said it would cost Peugeot €70m (£48.6m) a year to keep Ryton operating on just one shift, while it would be €100m a year more costly to produce the new car in the UK compared with its favoured location, the Trnava plant in Slovakia.

Mr Nicolle said Peugeot was facing a €600m increase in costs this year due to higher raw material prices and more stringent curbs on engine emissions, and could not justify a reprieve for its costliest plant in Europe.

Peugeot's overall sales in Western Europe fell 2.2 per cent in the first half of the year but its UK sales held steady at 148,000. Although UK sales of Peugeot models rose in June, its sister brand Citroën recorded an 8 per cent decline in registrations.

The Society of Motor Manufacturers and Traders blamed the 3.6 per cent fall in the overall market on weaker consumer confidence and higher fuel costs. Sales have now fallen for nine consecutive quarters and are down 4.2 per cent so far this year.