Vauxhall is set to axe one in three of its dealerships putting at risk 3,700 jobs – as it becomes the latest firm to be hit by a slowdown in car sales.
The firm, which is owned by French giant PSA, will cancel contracts with all of its 326 dealers in the UK before striking new deals with only better performing branches. It is thought around 100 may close.
It will issue letters to all its dealerships in Britain at the end of April giving two years’ notice that it is terminating their contracts. It is currently deciding which of the dealers to offer new terms.
Vauxhall is set to axe one in three of its dealerships putting at risk 3,700 jobs
The firm, which is owned by French giant PSA, will cancel contracts with all of its 326 dealers in the UK
Stephen Norman, Vauxhall’s managing director, said: ‘Conditions in the motor industry are changing, the competition is much more ferocious today especially in the UK than it was five years ago and inevitably there are different methods of consumption of automotive products and services including online and digital.
Stephen Norman (pictured), Vauxhall’s managing director, said: ‘Conditions in the motor industry are changing, the competition is much more ferocious today especially in the UK than it was five years ago’
‘Given what we see as the evolution in motor consumption in the next five to ten years – we have to think about the profitability of our franchising network and it is in their interests that we have taken this decision difficult though that may be to perceive at this stage.
‘The profitability of the network is positive for quarter one this year and for the full year last year but the amounts being made are in our opinion insufficient as things stand today and we want to protect the profitability of the franchise as times goes by.’
Vauxhall’s communications director Denis Chick said the car maker will change the remuneration process for dealers and introduce new standards to better reflect the changing market, as consumers do more research online.
He said that the car maker will ‘probably lose a few retailers’ but denied reports that a third could be cut.
Vauxhall has the second largest number of dealerships in the UK after Ford.
Mr Chick insisted it would maintain this position after the franchising agreements are reformed, adding: ‘Nobody will lose their jobs.’
The brand was taken over last year by France’s PSA Group, whose efficiency drive has led to doubts over the future of the Vauxhall plant in Ellesmere Port, Cheshire
The Vauxhall Astra production line at the facotry in Ellesmere Port, with workers there facing the threat of up to 400 job losses
The brand was taken over last year by France’s PSA Group, whose efficiency drive has led to doubts over the future of the Vauxhall plant in Ellesmere Port, Cheshire.
List of potential Vauxhall dealership closures in London
Vauxhall London dealerships
WJ King Vauxhall Bromley
Now Vauxhall Staples Corner
GO Vauxhall Wimbledon
Now Vauxhall Kingston
Bristol Street Motors Vauxhall
WJ King Vauxhall Woolwich
Now Vauxhall Hayes
GO Vauxhall Beckenham
WJ King Vauxhall Bromley
GO Vauxhall Croydon
GO Vauxhall Chislehurst
Now Vauxhall West Hendon
Northern Motors Harrow
Bristol Street Motors Chingford
W J King Garages Welling
W J King Garages Bexleyheath
Tony LeVoi Vauxhall Romford
Now Vauxhall Heathrow
Last October, PSA announced 400 job losses at the plant where is currently makes the Astra family hatchback. That was shortly followed by a call for a further 250 voluntary redundancies in January this year.
The drastic cuts come just three days after Jaguar Land Rover announced it was axing more than 1,000 jobs after seeing a fall in sales which it blamed on the crackdown on diesel engines.
Vauxhall’s European sister company Opel is also shutting dealerships across the continent as the company tries to adapt to changing consumer habits which are seeing customers visit car dealers less and less.
Demand is also falling.
Vauxhall’s UK sales dropped 18.28 per cent in the year to date from 66,733 to 54,535, compared to a 12.38 per cent decline across the UK market.
Mr Norman declined to put a figure on how many dealerships would be shut.
He said Vauxhall would still be the second biggest in terms of retail dealers in the UK, but closer to the third biggest, which is Volkswagen with just under 200 dealerships.
Mr Norman added: ‘Certainly we will be closer to the third biggest in terms of the number of dealers but we will still have more dealers second only to Ford in the United Kingdom,’ he said.
Vauxhall’s dealerships employ 12,137 people in the UK.
Vauxhall is set to axe one in three of its dealerships putting at risk 3,700 jobs – as it becomes the latest firm to be hit by a slowdown in car sales
Vauxhall, which is owned by French giant PSA, will cancel contracts with all of its 326 dealers in the UK before striking new deals with only better performing branches
He insisted jobs wouldn’t be threatened due to the refranchising, as the sites could move to selling other brands.
Vauxhall and Opel were bought by French car giant PSA group last year from the General Motors, with the new group now trying to save around £864m The refranchising of UK dealerships, previously carried out in 2013 when the network was reduced from 349 to 326, comes amid concern for Vauxhall’s future in the UK.
Demand for new cars dropped 16 per cent in March
The new car market continues to decline as demand for diesels plummets, industry figures show.
Figures for March show that new car registrations fell by around 15.6 per cent year-on-year, according to the Society of Motor Manufacturers and Traders (SMMT).
This was driven by a fall of just over 37 per cent in the number of new diesel cars bought.
Registrations of petrol cars rose by almost 1 per cent, while demand for alternatively fuelled vehicles such as hybrids and pure electrics increased by around 5.7 per cent.
The overall market fell by approximately 12 per cent in the first quarter of the year.
The SMMT had predicted a ‘softening’ of new car sales last month as March 2017 saw a record high for registrations due to many motorists buying cars before changes to vehicle excise duty came into effect.
Fears have been raised for the future of Ellesmere Port factory, where Peugeot is cutting around one-third of workers and which is fighting to build a new model after 2021 when the current generation of Astras runs out.
However, last month PSA announced it would increase production at the company’s van factory in Luton, from 59,000 vans per year to 100,000.
Cuts to Vauxhall’s network comes as Britain’s biggest carmaker, Jaguar Land Rover, yesterday confirmed plans to cut 1,000 jobs, blaming unpopularity of diesel and weak consumer confidence following the Brexit vote for falling sales.
One thousand agency staff at its plant in Solihull are not having their contract renewed, while 362 permanent staff will be transferred to another West Midlands site, at Castle Bromwich, to Solihull.
Jaguar’s UK sales in March were down 26pc compared to March 2017, and 16pc in continental Europe.
Rebecca Long-Bailey, the shadow business secretary, said the changes to Vauxhall’s network were ‘deeply concerning.’ She added: ‘The Government must urgently meet with Vauxhall and the trade unions to ensure that workers are properly supported and jobs safeguarded.’