Business Irish

Thursday 16 August 2018

Opel Ireland to renew all of its franchise deals despite cuts

Opel Astra
Opel Astra
Eddie Cunningham

Eddie Cunningham

OPEL Ireland is renewing contracts with all 30 dealers in its network its general manager has said - despite cuts to as much as one in three of the group's UK dealerships as part of a Europe-wide cost-cutting move.

Opel Ireland general manager Gillian Whittall was responding to queries from the Irish Independent following the disclosure that Opel, and Vauxhall in the UK, plan to cut the number of dealerships

It's part of a drive by French owner PSA (Peugeot/Citroen) to reduce costs at General Motors' loss-making European arm, which it acquired last year.

Since then it has been pursuing a restructuring plan to return it to profitability.

But in confirming renewal talks with dealers, Dublin-based Ms Whittall said: "Our dealers are, and will remain, our primary route to market and point-of-contact with our customers.

"Our dealer contracts are the basis for our retail distribution strategy into the future."

The contracts will be adapted to focus on sales performance, customer satisfaction and changing consumer behaviour.

"We are embarking on a strong future together with our dealer partners, with a more competitive go-to-market strategy," said Ms Whittall.

Europe-wide, 1,600 Opel and Vauxhall dealers will be given two years' notice from April 30 that the manufacturer is ending its relationship with them, and proposing a new contract with about two-thirds.

According to official Society of Irish Motoring Industry (SIMI) figures, registrations of new Opel cars fell by 34.4pc to the end of March this year even though they have only recently brought new models to the market.

In the UK, traditionally Opel's biggest market, where it sells under the Vauxhall brand, demand fell 22pc in 2017, compared with an overall market decline of 5.7pc.

UK dealers may bear the brunt of Opel's cost-cutting.

The CEO of a dealership group, speaking on condition of anonymity, told Reuters last month that Vauxhall wants to cut its showrooms by roughly a third to around 200 outlets to ensure its sales per outlet are "in a good place".

Volkswagen sold a similar number of cars as Vauxhall in the UK, despite having a third fewer dealerships.

Earlier this month, Vauxhall was given a boost in the UK when its parent agreed a £100m-plus investment in its Luton plant which produces vans, securing production there for at least the next decade.

However, doubts hang over the future of the Vauxhall plant at Ellesmere Port - which builds the Astra car - with the unknown consequences of Brexit looming.

In Britain, Vauxhall UK boss Stephen Norman said that the network was profitable last year in the first quarter of this year and all of last year, but at an "insufficient" level, and the refranchising is aimed at "addressing this and protecting it" for the future.

He said it was not related to the UK's decision to quit the European Union.

"Competition is much more fierce than it was five years ago, there are different methods of consumption [such as buyers looking online]. It is not any one single reason," he said. (Additional reporting Reuters/Daily Telegraph)

Irish Independent

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