Peugeot will feel the backlash from its decision to shut Ryton in the showrooms, the country's leading business lobbyist believes.
Sir Digby Jones, the outgoing director general of the CBI, said he believed the French carmaker was "making a big mistake".
Talking exclusively to The Birmingham Post yesterday, Sir Digby said British consumers would in future turn away from buying Peugeots.
They prefer to buy cars from overseas manufacturers perceived as being prepared to invest in Britain.
"Peugeot will suffer in the showrooms for shutting Ryton," said Sir Digby, who is rumoured to be taking a top advisory role with Ford in Europe when he retires from the CBI in June.
"People admire BMW for its willingness to invest in the Hams Hall engine plant and the Mini plant at Oxford, Ford for investing in Land Rover and Toyota for what it is doing at Burnaston. They like to support companies who invest in their community, which is why I think Peugeot is making a big mistake."
Sir Digby said Tuesday's announcement was a "desperate shame" for Coventry but he was confident that the city would bounce back from the blow of losing its last volume car manufacturer.
He went on to stress that Britain remained the favoured location for investment by US, J apanese and German companies.
"The reasons why they choose to invest here rather than in France include the fact that we have a flexible labour market, we have the rule of law and we speak the global language of business, which is English, not French.
"Companies that employ people here can move them about and, sadly in this case, let them go.
"I disagree with the unions when they say we need tighter employment laws to stop this sort of thing happening."
Peugeot's argument that Ryton faces the axe because it costs 415 euros, or £286, more to build a car there than at any other of its plants could also backfire, Sir Digby said.
The reason for the adverse cost differential is that the company has invested proportionately less in Ryton than in its French plants.
"Because it costs them more to lay people off in France, they employ fewer in the first place. When you employ fewer people you have to invest more in equipment. Peugeot's factories in France are going to become seriously unproductive compared with places like Slovakia and China.
"They should be closing factories in France rather than in Britain."
Sir Digby yesterday declined to comment on spec-ulation that he has been offered a high profile consult-ant's role within Ford of Europe.
But industry sources told the Post last night that an announcement could be made as early as today.
They believe that Sir Digby's brief could include changing the perception of Ford held by the Government.
The view within the industry is that Ford, whose Premier Automotive Group of luxury European brands takes in Jaguar, Land Rover, and Aston Martin, is regarded primarily as a British company and is taken for granted - unlike inward investors such as Toyota, Honda, Nissan and BMW.
In reality, key financial decisions affecting thousands of jobs in the West Midlands are being taken at Ford's global HQ in Detroit.
It was announced last week that Sir Digby is to become a top level adviser on industry to accountants and business services group Deloitte.