Vauxhall TERMINATES contracts with its entire UK dealer network

Vauxhall has terminated the contract with its entire 326 UK dealer network as it looks to trim its outlets and seeks profitability as part of the PSA Group.

When PSA acquired Vauxhall last year from GM, it was clear there would need to be big changes to make the new group profitable, and those changes are already starting to happen.

Astra production has been cut by 25 per cent at Ellesmere Port despite, or perhaps because, PSA has committed to production there until 2021, but there’s better news for Vauxhall Luton where Vivaro van production will increase as Luton also builds Peugeot and Citroen versions of the Vivaro.

Now it’s the turn of the Vauxhall dealer network to come under fire, as Vauxhall terminates contracts with its entire network, giving dealers two years notice from the end of this month.

The action isn’t that unusual as car makers negotiate new contracts with their dealer networks, but it seems clear that PSA/Vauxhall are intent on culling their network significantly when the new contracts are negotiated (Opel are doing the same in Europe).

The expectation is that, in the face of falling sales (down by 22 per cent in 2017 as the overall market shrank by less than six per cent) Vauxhall plan to continue with a network of dealers closer to 200, a significant drop on the current, seemingly unsustainable, 326.

No doubt Vauxhall will be keen to retain the profitable dealers and drop those whose performance is marginal, and they really don’t need so many dealers to offer a proper service to customers. VW, with a similar sales volume, manage very well with around 200 dealers, although Ford – the UK’s biggest seller – has around 500.

And, let’s face it, with online sales growing every year, the time will come when a dealer network is there simply to provide after sales service – not sell new cars.