AM Online

The big picture: On the road to survival

This column is turning into a harbinger of doom, but sadly it’s simply reflecting the market. Three plcs feature prominently in the October 31 issue of AM and all are talking of streamlining.The school report on Vertu, which posted a solid set of interims, is actually generally good – strong profits in a tough environment. 

However, it still had to close a Motor Nation site and a van centre recently, cutting jobs.

Inchcape issued a profit warning and said it would be making redundancies with particular focus on the back office.

Lookers is cutting management at three VW outlets in the north-east; it has already made 60 redundancies after closing its Skoda/Chevrolet site in Maidstone and 26 after shutting Land Rover in Bury St Edmunds.

Pendragon chief executive Trevor Finn must be feeling a sense of validation. He was rounded on by critics after announcing 500 job cuts earlier this year, but was forthright in his view that Pendragon had simply acted quickest in preparation for a market downturn and that other groups would have to take similar action. 

Of course, Pendragon is still in pain with more dealership closures and job cuts and a share price that dipped below 5p this week – but its restructuring can now be put into better context.

Those big groups aren’t the only ones making redundancies – it’s widespread. Regional groups I’ve spoken to have cut 10% of their workforce.

If that’s averaged out across the 5,500 UK dealerships, which employ some 180,000-200,000 people, it could mean up to 20,000 job losses. Perhaps 5% is more realistic – but that still equates to as many as 10,000 staff.

And that’s assuming there are 5,500 sites in the future.

One senior carmaker executive predicts a third of dealerships in the UK could close over the next 12 months to around 3,700. 

Assuming an average staff force of 30 employees, that adds 54,000 heads to the redundancy list.

Now consider the 15 or so bodyshops that are going bust every month, each employing around five people.

Over the course of a year, that’s another 1,000 or so. It’s a similar story in the independent aftermarket.

But dealers are a hardy bunch. Many have survived two recessions and they know that to survive this one they need to spread their business focus. New cars, used cars, aftersales, bodyshop, parts and F&I – dealers have many strings to their bow. The key in today’s climate is finding the right ones to pluck.

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