Vauxhall will close its 120-year-old Luton plant in April, the parent company Stellantis announced.

More than 1,100 jobs at the van-making factory are at risk, but Stellantis said it is hoping to transfer “hundreds” of Luton jobs to the group’s Vauxhall site in Ellesmere Port, Cheshire.

It is now in consultation with unions and employees over the proposals, which will also see it invest £50m into the Ellesmere Port factory.

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The company said it would offer “relocation support” and “an attractive package” to employees who want to transfer to Ellesmere Port in the North West of England from Luton, north of London.

The company’s managing director Maria Grazia Davino had warned closure was possible. In June, she told an industry event, “Stellantis production in the UK could stop”, as more needs to be done to spur consumer demand for electric vehicles.

But the losses and investment in Ellesmere Port are a “better outcome and it could have been”, business secretary Jonathan Reynolds told MPs of the Business Select Committee.

The government was first told of Stellantis’s plan shortly after it took office in July and fought back “very heavily” against the closure, he said.

An industry-wide phenomenon

It is the second British car producer to announce job losses in less than a week. Just six days ago Ford revealed plans to cut 800 roles in the UK as part of a cull of 4,000 jobs across Europe.

Pressures have been on UK car makers to meet the government’s electric car mandate with talks on the 2030 deadline taking place between government and industry.

Financial penalties are currently levied against manufacturers if zero-emission vehicles make up less than 22% of all sales. This will rise to 80% of all sales by 2030 and 100% by 2035.

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Mr Reynolds told the Society of Motor Manufacturers & Traders (SMMT) annual dinner on Tuesday night he is “profoundly concerned” by the way zero emissions policies work.

“I’m going to be frank with you – I don’t believe the policies that we have inherited, and I mean specifically in relation to zero-emission vehicles, are operating today in a way anyone intended them to,” he said.

“In fact, I am profoundly concerned by how that is working at the moment.”

Across Europe, the automotive sector has been feeling the pressure of slowed sales and competition from China. On Friday, Bosch – the world’s biggest car parts supplier – reported the loss of 5,500 jobs, predominantly in Germany.

Workers representative Unite said the proposal is “a complete slap in face” for its members.

“Whatever the positive benefits this plan may have for Ellesmere Port, that is not acceptable,” it said.

A government spokesperson said: “We have a longstanding partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.

“The government is also backing the wider industry with over £300m to drive uptake of zero-emission vehicles and £2bn to support the transition of domestic manufacturing.”