Peugeot CEO - U.K. plants uncompetitive, open to South America alliance

Chairman of the Managing Board of PSA Group Carlos Tavares attends a news conference in Ruesselsheim, Germany November 9, 2017. REUTERS/Ralph Orlowski

(Reuters) - Peugeot SA PEUP.PA Chief Executive Carlos Tavares said on Thursday he planned to meet next week with the automaker's UK unions and government officials to discuss the future of Peugeot's Vauxhall plant, where Tavares said production costs are twice those of its plants in France.

Peugeot has already begun cutting jobs at a Vauxhall plant in Ellesmere Port, in moves that would reduce the workforce by a third, or 650 jobs. This has provoked protests from unions.

Tavares told reporters during a briefing in Detroit that a hard Brexit, that results in tariffs on exports of U.K.-built vehicles would increase pressure to cut costs. He said the U.K. plant, which Peugeot took over when it acquired Opel and Vauxhall from General Motors CoGM.N last year, is at efficiency levels similar to where Peugeot stood four years ago, when Tavares began his turnaround effort at the French automaker.

“What counts is to bring (U.K.) plants to the level of cost and quality that is the same as Continental Europe,” Tavares said.

Separately, Tavares said he is “very open” to a potential alliance in Latin America. He was responding to a question about Ford Motor Co’s signal two days ago that it was exploring options for its money-losing Latin American business.

Tavares declined to say whether Peugeot planned to discuss a partnership with Ford F.N. Asked if he had talked with Ford executives, Tavares said, "not so far."

Tavares was in Detroit to promote Peugeot’s plans to gradually re-enter the U.S. market, starting with ride services.

Reporting by Joe White in Detroit; additional reoprting by Ankit Ajmera in Bengaluru; Editing by David Gregorio