VAUXHALL and Opel dealers across Europe will have their contracts terminated in a sweeping overhaul of the brands – now owned by PSA Group – that could leave only two thirds of franchises remaining by 2022.

The first wave has hit the UK where 326 Vauxhall dealers have this week been told their contracts are void and that around one third will not be renewed.

In Europe, the overhaul affects more than 1600 dealers including about 400 in Germany selling Opel. It is not known what percentage will lose their franchises.

The shock news – not dissimilar but on a far greater scale than the overhaul of the Holden dealer network in 2017 – follows PSA Group’s directive to Vauxhall and Opel to increase profitability in the face of plunging sales.

Vauxhall, until recently the UK sister brand of Holden, saw sales spiral 22 per cent in 2017 compared with the UK market fall of 5.7 per cent. Its market share fell to 7.7 per cent from 9.3 per cent in 2017.

Vauxhall managing director and chairman Stephen Norman said to AM Online this week that the plan involved issuing new, identical contracts to a restructured Vauxhall and Opel dealer network across Europe “for reasons of equality”.

All Vauxhall two-year franchise contracts are being terminated from April 30 as the brand begins a complete refranchising program.

“Then we would propose new dealer contracts with those partners with whom we saw, for them, a stable economic future beyond that,” he told AM.

“In the vast majority of cases, these contracts that are being cancelled will be followed by new contracts that will take effect in 2020.”

In an explanation, Mr Norman said the issuing of new contracts would be based on the ability of a dealer – regardless of size and location – to be profitable and look after its customers and that it was not “somebody with a map deciding Vauxhall needs dealers in particular spots”.

Mr Norman’s comments will resonate with Holden dealers who complained that Holden’s method of culling dealers was was based on “pins on maps” rather than the track record of long-established dealers welded to the brand.

Mr Norman was not able to give numbers in the Vauxhall cull but said there would be fewer dealers from 2020.

“There will be a reduction. But today we are the second-biggest brand in the UK after Ford with the second-biggest network after Ford,” he said

“After this rationalisation, we will still be the second-biggest brand with the second-biggest network.

“Obviously, we’ll move closer to the number three (Volkswagen) than we are today, but we will still have more retail dealers than the third biggest.”

Volkswagen has an eight per cent market share in the UK and has about 200 dealers.

Mr Norman indicated that the shake-up in the dealer numbers was affected by the growing use of online retail services.

KPMG’s latest global report, Global Automotive Executive Survey 2018, predicted that half of UK car dealerships could close by 2025 and that retailers would have to work fast to prepare for the three main disruptors: the arrival of the EV; the connected car; and mobility as a service.

By Neil Dowling