What went wrong with a company spanning a history of 160 years?

In an ever-growing market where customers want something new literally every day, you either adapt, or you perish. Guess Vauxhall chose the second option. As reported by Telegraph, Vauxhall and Opel are terminating the contracts of all 326 dealerships in Britain as they battle to deal with plunging sales and a changing market. Yes, all of them! Read on to know more:

Britain is just the tip of the iceberg

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Around 1600 dealers across Europe will be given two years’ notice from April 30, 2018 that the manufacturer is ending its relationship with them

It’s not just the Britain dealerships facing the ax. Around 1600 dealers across Europe will be given two years’ notice from April 30, 2018 that the manufacturer is ending its relationship with them, and proposing a new contract with about two-thirds of them, inviting them to reapply for other brands under the PSA Group. Despite the major downfall, Vauxhall would still be Britain’s second-largest dealer network after the restructuring. This suggests about 200 or so dealerships will remain in the UK. Interestingly, just last year the PSA group (which owns Peugeot, Citroen, and DS) bought the ’loss incurring’ Vauxhall and Opel from General Motors for €1.9 billion.

Adverse effects on employment

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The consequences of this dissolution will result in 12,000 people losing their jobs.

The consequences of this dissolution will result in 12,000 people losing their jobs. but Stephen Norman, Vauxhall’s UK boss, insisted that staff would not lose their jobs as a "direct result" of Vauxhall’s decision to refranchise the network. "Based on 42 years experience in the industry, and having been through four of these network refranchisings, I do not expect jobs to be threatened," he said. "Nobody is being sacked. The vast majority of franchises will continue as before."

Our Take

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Vauxhall-Opel saw their sales graphs dip heavily in Britain last year.

Vauxhall-Opel saw their sales graphs dip heavily in Britain last year. They managed to sell just 195,000 cars compared to the 250,000 units sold in 2016. In comparison, Volkswagen sold almost the same number of cars with 200 dealers! This clearly shows that having 320-odd dealerships in a single country is a recipe for failure. In retrospect, manufacturers are getting out of their comfort zones to sustain - like Toyota getting into performance hatches, luxury brands taking the EV route, etc. - but Vauxhall and Opel succumbed to the pressure as they had no new, interesting product in their line-up. The move to downsize is not related to the UK’s decision to quit the EU; as the Vauxhall CEO said, it was "something that would happen with or without Brexit". Given the fierce competition nowadays, could we see any other company going through this? Let us know your thoughts in the comments section below.

References

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Read more Opel news.

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Source: Autocar

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