Losses are inevitable from the 302 dealerships though Peugeot UK managing director Pierre Louis Colin will not put a figure on it until the review is complete in spring. Some reports claim 10% of the network will be cut.
“We will reduce the network by 2010 by concentrating on larger dealerships,” he said. “We have small groups with four or five outlets and it might make more sense for them and us to rationalise to two or three larger outlets.”
The network structure will be finalised by spring, allowing Peugeot to issue two-year termination notices before the Block Exemption review in 2010. The study will also assess the optimum number of authorised repairers.
“We don’t exclude anything. There might be closures, we might reopen points, there might be a change of investors if a dealer is underperforming or there might be a change of premises for existing dealers if their facility is too old,” said Colin.
“We need a network with good income because we are quite demanding in investment in premises, people and training. Selling more cars from fewer dealerships will increase their profits.”
While 75% of the network has raised profits year-on-year, the rest have worsened and some are loss making.
Dealers whose sites are not large enough to handle an increase in sales will need to invest in larger premises.
Peugeot-owned Robins & Day is not immune to the review. Peugeot has 34 outlets, which account for 20-25% of new car sales.
Most are in high-cost areas, including 10 in London, and Colin does not rule out adding more in cities. He also does not rule out selling non-metropolitan sites if an independent dealer is better placed to run them.