Company is renegotiating franchise agreements with dealerships in bid to improve profits
Vauxhall will cut back its dealership network amid rapidly falling UK car sales and changing consumer behaviour.
The company will terminate contracts with all of its 326 dealerships and renegotiate them in order to make its network more profitable. Vauxhall’s European sister company Opel is carrying out a similar exercise across the Continent.
The exact number of Vauxhall dealerships that will survive in the UK is not known but is likely to be between 200 and its current figure, the company said.
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Vauxhall’s sales plunged by more than a fifth last year and were down 18 per cent in the first three months of this year. Across the industry, UK car sales as a whole slipped 5.6 per cent in 2017.
Consumers now do far more of their research into making a new car purchase online, lessening the demand for dealerships.
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Vauxhall’s communications director, Denis Chick, said the company was improving efficiency in every area of its business, including its dealership network.
“As a result, we will adapt our retailer agreements to ensure working together is simpler, quicker and more innovative, ultimately benefiting our customers,” he said.
“Our retailers are, and will remain our primary route to the market.”
The car manufacturer will also introduce new standards in a bid to improve customer service and allow all dealerships to sell commercial vehicles, which some have been prevented from doing until now.
Last month, it was reported that Vauxhall will cut up to 100 of its 326 dealers in the UK. Industry publication Automotive Management reported that Vauxhall owner PSA Group – which is also Peugeot's parent company – intends to cull many of its UK retail locations over the next year, threatening more than 3,800 jobs.
Mr Chick described that figure as “pure speculation” and said many dealership franchisees would choose to move into other parts of the industry.
The latest news comes after PSA said in October that it would cut about 400 jobs at Vauxhall’s Ellesmere Port site. In January it said it would slash a further 250 roles.
The UK car industry has blamed falling sales on uncertainty over regulations on diesel cars, which have faced a backlash after it emerged that they were far more polluting than had been claimed.
Consumers have also been putting off big purchases as uncertainty around the health of the economy after Brexit continues.