The Managing Director of Vauxhall has confirmed the company will “terminate all dealer franchise contracts with two years of notice.”
Stephen Norman revealed the plan to reduce Vauxhall’s dealership by a third as a response to declining sales and changes in the way people are buying cars.
As one of the oldest vehicle manufacturers and distribution companies in the UK, it is a blow to see the changes by such a large number to its dealership.
The brand will reduce its total number of dealerships by more than 100, going from 326 to approximately 200. It is the second reduction of its dealer network in recent years; the last time this was refranchised was five years ago when the network went from 349 to the 326 currently held.
Owned by the PSA Group since last year, Vauxhall will be joined on a cost-cutting drive by Opel, who is also owned by the Group.
As a result of reduced sales, Vauxhall’s Managing Director said neither that brand nor Opel will need as many retail outlets.
In the last year, the sales of Vaxuhall decreased by 22%, which is much more than the overall decline that was measured at 5.7%.
At the start of this year too, sales have been sluggish, with figures revealing a decline of 18% in the first quarter of 2018.
This, added to a reduction in its market share from 9.3% to 7.7% last year, suggests action has to be taken and the Managing Director – who was appointed in January to revitalise the company – has taken this difficult decision to cut the number of dealerships.
The ever changing people purchase cars has also had an effect on this decision; the Group predict that more people will buy their vehicles online in the future.
Opel is Vauxhall’s equivalent in Europe and will also see some of its dealers decrease.
Despite this, Mr Norman stressed that none of the 12,000 people who work for the brand’s dealers will lose their jobs.