The global recession sparked a major restructuring for General Motors UK. Saab was sold off, Cadillac was almost sidelined, Chevrolet has been split into a separate business unit and Vauxhall saw its share of the total UK new car market take a dive as the company car and rental markets froze and scrappage drew retail customers to aggressive value brands.
For Duncan Aldred the challenge is now to rebuild Vauxhall’s brand and keep it in profit. He moved from his post of director of sales operations at GM Europe into the managing director’s seat at Griffin House in Luton in December 2009, as long-standing MD Bill Parfitt stepped into an executive chairman role.
One of his first tasks was to undertake a ‘roots up’ 90-day review of the business to enable the company to develop a strategy for growing its market share while keeping a close eye on profitability.
This has identified cost-saving efficiencies – including 550 voluntary redundancies from head office, warehouse and the Luton van assembly plant after Vauxhall offered two years’ salary as compensation. It also examined which sales channels Vauxhall will attack.
“We’ve looked at where we choose to sell. We’re probably in the fortunate position where we could go out and sell lots of short-cycle cars, and in the past we’ve done that. But at some point it gets to the position where it doesn’t help the brand.
“Now we’re in a position where we can be selective. We can choose to do an appropriate level of business in a particular sales channel, with the goal of strengthening the brand and residual values and of growing share of the retail and user-chooser/small business markets.”
Aldred’s strategy has to work. Nick Reilly, president of GM Europe, has already said he wants Vauxhall in profit by 2012. The brand is GM’s fourth largest in the world for sales.
Aldred believes one of Vauxhall’s strengths is its dealer network. The brand has 300 retail partners with nearly 500 sites. It’s a similar scale to when Aldred was last at Vauxhall as retail sales director last decade.
“We’ve seen the network come out of the recession with only a handful of losses and frankly many of those were inevitable. We’ve got the network that we want still there. There are no plans to change it either up-sizing or down-sizing,” he said.
Aldred maintains that Vauxhall’s decline in market share, down to 11.9% last year from 14% in prior years, should not mean pain for its dealers and will be built up again by offering attractive new products and creating more reasons to choose Vauxhall.
Whole chunks of Vauxhall’s volume went through predominantly fleet channels that didn’t go through the network. However, the brand is still a “very strong” number two in the retail sector, plus has growth opportunities with SMEs through Insignia, and is number one in Motability. “All these bits that touch the dealer remain very strong,” Aldred added.
Scrappage is a sore subject for Vauxhall. Its 26,000 registrations generated by the initiative were well short of those of fellow market giants Ford (44,000) and Volkswagen (34,000). Vauxhall was having to save costs and simply had no products which it could price to compete with the £5,000-£7,000 new cars being promoted by some growth-hungry manufacturers, such as Hyundai, Kia and Fiat.
“We chose not to do business at the bottom end of the market. We didn’t wish to get down to that level, so lost some share from that.”
Consequently, Vauxhall took a 6% slice of the scrappage market, compared to its 10% retail market share. However, Aldred believes a true picture of the market will emerge this year now that scrappage has ended.
Which is why Vauxhall must be ready to grow and prove itself fit for the future.
Work had already begun before Aldred’s arrival. The Griffin emblem was updated to signal a more modern Vauxhall . It is steadily being rolled out at dealerships (Arnold Clark was first to use it at Manchester).
Investment is being made into advertising, one of the areas which was subjected to cost-savings over the past couple of years. An “all-embracing” marketing strategy will include TV, online and social media to promote the Vauxhall brand.
In recent weeks all its dealers have undergone training to get them focused on digital marketing and handling email enquiries. Dealers have been given a “modest” target for gathering email addresses.
Renewed emphasis is being placed on customer satisfaction and retention. Aldred wants it to be given equal priority with sales and aftersales profitability and volume. IT systems have been put into dealerships to measure service retention, with the aim of 10% improvement this year.
Vauxhall has also examined the training and CSI programmes of the past decade, but Aldred says it is clear that, while the network is among the best in Europe, satisfaction is not as strong as the manufacturer thought.
“We need a completely new approach, but we don’t have the answers yet,” he added
“Our dealers have to work out for themselves how to deliver the experience and we have to make sure there’s equal focus and priority in place and that we try to incentivise it properly. We can give best practice guidance, but at the end of the day the dealers have to deliver it.
“You’re never going to have a strong brand if you’re not treating your customers that well.”