Vauxhall has rebutted rumours that it is culling its dealer network, clarifying that the plans are aimed at widening the service it offers fleet and retail consumers, and improving profitability for franchisees.
The story has hit the headlines in the last 24 hours with many publications focusing on claims that a third of dealers will have their contracts terminated and thousands of jobs will be lost. But Vauxhall’s director of communications, Denis Chick, told Fleet World that refranchising is carried out by all manufacturers every 5-10 years as rules and the market change.
At the end of this month, all of the brand’s UK dealers will receive a letter giving them two years’ notice, mirrored across Europe in markets where Opel is offered instead. The carmaker will then renegotiate its contract with those retailers on an individual basis going forwards within those two years.
Although this will bring lots of changes, Chick emphasised that a key one would be the ability for dealers to work on both the van and car sides of the business – following the announcement a fortnight ago that Vauxhall is to build a new Vivaro at its Luton plant from mid-2019 as well as PSA vans.
Chick acknowledged that there would be some dealers who would want to move on – including within the Group to running Peugeot or Citroën franchises – or even moving on to used cars, but said this wasn’t expected to result in any job losses or cutting the network by a third, as had been widely reported in the press.
“We are currently number two in the market in terms of the size of our network against Ford,” he explained. “After this exercise we will still be the second biggest retail market in terms of the number of retailers in the UK, probably nearer to the Volkswagen number than the Ford number. That’s a recognised part of this action, that we will lose some of our retailers.”
The move follows Vauxhall’s acquisition by PSA Group last year but also due to changes in the market that are seeing people using dealers less when researching cars – due to the increase in digital information – and for servicing due to increased vehicle reliability and servicing schedules. Profitability, due to less footfall, and the exchange rate, were also playing a part, Chick added.
“We need our retailers going forwards to be able to invest in the future, but we also want them to be able to look after their customers and up the ante in terms of loyalty. If you bring the customers back time after time then you have a loyal customer base that you can depend on for the future. So those are the kind of things that are driving us.
“It’s a necessary thing to do. We will end up with a stronger network, a more profitable network and a network that can invest in the future and look after our customers in the best way possible. It’s a good thing all round. For those retailers who will want to come along with us – and there are lots of them – life will be better for everybody as a result.”
Sue Robinson, director of the national franchised dealers association (NFDA), which represents franchised car and commercial vehicle retailers in the UK, said: “We do not foresee any particular implications for fleets following Vauxhall’s announcement that its dealer network will be reorganised.
“There will remain a significant number of dealers geographically spread across the UK to sell and service cars. Franchised dealer members who require any assistance should contact the NFDA where we can advise on employment and other business-related issues that may arise. We will continue to monitor the situation closely to be able to offer the support our franchised dealer members may need.”
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