AS Vauxhall prepares to drastically reduce the size of its UK sales network as part of a cost cutting drive family car dealer, Sherwoods last night sent out a bullish message that impressive trading this year means it is here to stay. 

The outlook for some Vauxhall dealers currently making a loss or registering meagre profit margins looks grim as the manufacturer plans to “terminate all dealer franchise contracts with two years of notice”, Vauxhall managing director Stephen Norman said.

The Vauxhall boss wouldn’t confirm how many of its 93 retailers, which operate 326 UK forecourts, would be retained, and he denied speculation that a third could be axed. “The majority of retailers who are currently with us will remain,” he said.

“We believe some dealers need to make more money,” he explained.
Vauxhall sales tumbled in 2017, with demand for its models down to 195,000 units, a decrease of 22 per cent on 2016.

In the face of this, Mr Norman said that dealers offered new contracts would be chosen because they rank highly for profitability, “including used car sales and after sales, as well as customer satisfaction”.

The overhaul, which was announced to the press before dealers were given official confirmation by Vauxhall, reflects the huge challenges facing the motor trade.

Simon MacConachie, managing director of Sherwoods, which has dealerships in Darlington, Stockton and Northallerton, accepted that 2017 had been “a tough year” and a restructure, which included redundancies, took place to help improve the bottom line.

Now employing 153 staff he believes that Sherwoods is set up for a resurgence in 2018.

“It is interesting to hear this announcement from Vauxhall, which reflects the challenges that some dealerships are facing, while we are at the other end of the curve enjoying a very strong start to the year.

“By the end of the first quarter this year we were already making four times the bottom line we did for the whole of 2017 and I am delighted about that. We were number one in Darlington in 2015 and 2016 and if we continue the current levels of trading then we will be back on top again this year.”

Asked if Sherwoods’ in Northallerton was at risk due to it being the smallest of the three in the group, Mr MacConachie told the Echo: “All of our branches make a valuable contribution to the business so it would make no sense to close any of them.”

“I suspect that any Vauxhall dealerships who are loss-making or just breaking even will be those looking over their shoulders right now.

“We recently had a strong indication that our locations are key to Vauxhall’s strategy so that reassurance, combined with our strong performance this year, gives me the confidence to say that we are in a very good position. We are bullish about the year ahead and we look forward to strengthening our relationship with the manufacturer.”

A spokesperson for another North-East Vauxhall trader, Bristol Street Motors, said: “We have spoken at length to Vauxhall about the proposed reorganisation and are very happy to confirm that all our dealerships will be receiving new contracts.”