Vauxhall’s vital signs are perking up under PSA Group ownership, but UK boss Stephen Norman is just getting started
Steve Cropley Autocar
27 August 2018

Stephen Norman, the 63-year-old car industry veteran who took charge of Vauxhall in January, is convinced that the “major highlight” of his 43-year career lies ahead.

The task that will bring the glory to Norman and his team is the rapid restoration of Vauxhall to sales success and sustainable profitability, a project that a long line of decent managers, working under Vauxhall’s previous owner, General Motors, have already proved is no pushover.

However, having spent the first few months of his tenure devising a simple but ground-shaking five-point strategy for a Vauxhall turnaround – which I am in the company’s Luton HQ to hear about – and having had his plan rubber-stamped by the big PSA bosses with a speed GM could never have managed, Norman counts his chances of success as very good. Not that odds matter “because I don’t intend to fail”.

Such bullish declarations are unheard of for recent Vauxhall bosses, weighed down by their predecessors’ lack of success, and beholden to a controlling German management itself controlled from a US ivory tower.

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They have been either competent place-holders or haven’t lasted. Vauxhall has plodded on as an ‘always-there’ kind of company, selling cars with a slightly lower brand image than they deserved to a gently declining band of usual suspects.

But decision-making is different now. Norman has a lot of authority because the UK boss’s job has been redefined. But in any case, under Carlos Tavares (with whom Norman has worked for more than a decade) and German-based Opel boss Michael Lohscheller, decisions are “extremely simple and extremely rapid”.

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Norman readily acknowledges Vauxhall’s time in the slow lane. He’s nothing if not a realist. But when we move to a boardroom near his office – one wall covered by the simple, graphic ‘True Brit’ Astra ad appearing on hoardings all over the country – he begins with a short UK car market history lesson to demonstrate that Vauxhall is a far better company than many think. “I really take umbrage when people say Vauxhall is a disaster area,” he says. “It can do better, for sure, but it’s not so different now from what it always was.”

Norman produces charts to demonstrate that whereas Vauxhall (current UK market share 7.6%) was doing around 9% in the post-BL days of the early 1980s, Ford has dropped from 30% to not much more than a third of that today. Vauxhall did jump to 16% for a few years when the market suddenly saw the Cavalier as a far better bet than the Ford Sierra but, broadly speaking, Vauxhall’s fortunes have been “less irregular” than almost anyone. Premium manufacturers (whose volume has expanded from 2% to 20% in the period) are the real winners.

Other myths? Norman deeply dislikes the inference that Vauxhall can’t be successful because it depends on company car sales. “We’ve always done it,” he says. “Even back in the 1960s, our Vivas, Victors and Veloxes were company cars. Today, our Corsa sales are mostly retail, but the bigger cars still go to fleets. We sell to user-choosers, and there’s nothing wrong with a company car sale as long as it’s about as profitable as a retail sale. Our business is absolutely not built on sand, but on a different kind of rock.”

In pictures: cars of the Vauxhall heritage collection

Another popular Vauxhall criticism, says Norman, is its tendency to pre-register a large proportion of its cars at the end of each month – up to 21% of total volume against a national average of 15%, he admits with trademark candour – as a way of forcing cars into the market, albeit at lower prices. Exaggerated sales in the last three days of the month and big sales to hire fleets are other criticised volume-boosting measures, but Norman declares “everyone’s on that wagon”, producing figures to show that at Vauxhall both practices are in solid decline.

Then, rather like a rabbit from a hat, he produces a killer fact on Vauxhall’s all-important pricing power: by starting to refuse deals that “undersell ourselves”, the company has boosted its average transaction prices to within 4% of Volkswagen, everyone’s role model. This, he believes, made an important contribution to the remarkable Opel-Vauxhall financial turnaround announced last month and will help more to help in future. Norman says he will add efficiency and lower costs by gradually shrinking the Vauxhall line-up to three van and six car lines. The vans “choose themselves”, he says, based on size and the fact that the all-important UK-made Vivaro is coming next year. The car offerings will be a new Corsa, new Mokka, Astra, the Crossland and Grandland SUVs, and the Insignia executive saloon.

“It’ll be a slimmer range than many of our competitors,” says Norman, “but it’s what we need to reach our objectives.”

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Serially unsuccessful since 1999, Opel and Vauxhall recently contributed a near-miraculous £445 million profit to PSA’s half-year bottom line. What is more, the brands did it on the extremely healthy operating margin of 5%, respectably close to PSA’s own stellar 8.5%. Norman professes himself “not very surprised” at the achievement, in the sense that there’s more to be done.

Conditions are right, Norman believes, for a turnaround strategy to be effective. Most of the products already look strong. The UK-made Astra continues to win respect as a Golf competitor, even if sales are resolutely unremarkable. The Mokka, Crossland and Grandland SUVs sit in the market segments that appeal to British buyers. The graceful and capable Insignia executive saloon continues to be highly rated in the premium sector. A new Combo Cargo (Berlingo-Kangoo fighter) is due soon, and after that comes the biggest product news of all, an all-new Corsa supermini. And there will be a new PSA-based Vivaro van next year.

The five-point plan, Norman says, runs for the next three years and is designed to capture close to 10% of the UK’s combined car and light van market, estimated at 2.75 million units per year, of which around 350,000 are vans. Vauxhall isn’t claiming it can beat Ford, the market leader, but wants to be “a solid number two, not a vulnerable number two”. “We’re not presenting Britishness as a reason for purchase,” insists Norman. We say the reasons for purchase are things like value, approachability, ingenuity and progressiveness. The Britishness is a differentiator.

“We aim to position ourselves as a reference brand among mainstreamers. Not a prestige brand and certainly not a ‘me-too’ brand. We want to be the UK reference for what we’re good at. We make great cars for modest customers. Some people in this market are ashamed to put it like that. But we’ve never tried to be something we’re not. We’re confidently British.”

Norman’s five-point recovery plan:

The five-prong plan sounds simple but it’s very bold, especially for the Vauxhall of the old school. In short, it goes like this:

1) Boost sales of light commerical vehicles from the current 9% to 14-15% with the aim of becoming a strong number two to Ford in this market and get closer to the sales performances of the past. Use a slimmed- down three-van range with the new Vivaro as a springboard. Reorganise LCV dealers into between 50 and 75 “van business centres”.

2) Keep backing off pre-registrations, a practice that cuts profit margins and makes sales less valuable. This should be possible as quality of products keeps improving. Reversing the well-known John Lewis slogan, Norman says Vauxhall must stop “underselling ourselves” to a point where the incentives stop working.

3) Refranchise the dealer body, cutting the current 330 dealerships to 250 by 2020, boosting average annual sales per dealer from 290 to 415 units. Norman promises “a radical effect” on dealer viability. This new policy has been under way for several months, and he has been roundly criticised for it. “Leaving things unchanged would do a disservice to dealers themselves,” he says.

4) Reorganise parts distribution, setting up 46 countrywide group parts hubs, selling not just Vauxhall, Peugeot, Citroën and DS parts, but other makes’ components as well. Manufacturers have been losing earnings onparts–this is away of fighting back.

5) Improve Vauxhall’s brand strength, a move already started with the ‘True Brit’ campaign, which will soon give way to a ‘Keep calm and carry on’ SUV theme. There’s another in the pipeline whose message will be: “Don’t do ‘ish’, do British.” The inference is that typically British messages sometimes lack positivity – as in ‘slowish’ or ‘smallish’ – but liking British can be wholly positive.

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Comments
38

27 August 2018

By comfortably British do they mean French owned, Chinese financed and German designed and built (with the exception of a few models)?

Not really that British then.

27 August 2018
But since the Astra and the vans ARE made in Britain, comfortably more British than the Ford, VW and, in fact, ALL other competitors.
I find it curious that Ford is somehow perceived as British, despite ALWAYS being American owned and with design centered in Germany for some time, and ZERO vehicle manufacture for over five years,(Transit van) and sixteen years since cars were made in the UK.

27 August 2018

Perhaps what gives Ford some semblance of Britishness, aside from its history in this country, is the existence of the Dunoon technical centre.  And surely Nissan is more British than Vauxhall?  Built AND  partly designed in the UK?

27 August 2018

Erm... that's meant to be Dunton, Essex, not Dunoon in Scotland...!

27 August 2018

Ford since the mid-nineties has been using Mazda technology to develop their passanger vehicles, from chassis to engines. The Fiesta is based on Mazda 2, the Focus on Mazda 3 and the Mondeo on Mazda 6. The Duratec engines are Mazda-L series. In 2015 Ford sold its shares in Mazda and just announced that will be leaving the passenger cars segments in US. After that a partnership with VW was announced to produce vans (Transit and Connect) andit's expected to be extended to passenger vehicles for Europe and China where the brand will still offer them. So in the next years Fiesta will use Polo chassis, Focus the Golf one and Mondeo the platform used in the Passat. By then I would expect VW to be buying Ford as they will be in a more stronger position...

27 August 2018

"Chinese financed"?That 15% DongFeng share?

Check VW holdings!

27 August 2018
Rick Maverick wrote:

"Chinese financed"?That 15% DongFeng share?

Check VW holdings!

Check Daimler, their biggest shareholder is Geely. So does that make Mercedes a Chinese brand? 

 

27 August 2018

Technically yes.

Jaguar Land Rover is 100% owned by Tata Motors and for all legal purposes it's capital and ownership is Indian.

Likewise FCA is British as the company that came from the merge of Fiat and Chrysler was registered in London...

FMS

28 August 2018
TheBritsAreComing wrote:

By comfortably British do they mean French owned, Chinese financed and German designed and built (with the exception of a few models)?

Not really that British then.

 

No more or less, going by your arguement, than Jaguar, Land Rover, Mini, Bentley, Rolls Royce, etc. Most of these brands models are bought by savvy customers who know exactly what they are buying into and are happy to drive a brand with a great British heritage.

 

Without foreign intervention, all of those brands would have gone the way of those who no longer exist. Would you rather that happened, with the resulting job losses, supply chain loss, prestige loss, export loss, revenue loss, tax loss, etc?.

 

Go ask a line worker in any of these cars production facilities if they see your point of view.

 

How do you view Burnaston, Swindon and Sunderland and the indigenous employees who work to produce Toyota, Honda and Nissan cars for export?....as traitors to your version of Britishness?.

 

Not really...thinking this through, are you?.

27 August 2018

 He can sit there and give a positive land of hope and glory interview, but, it’s got to happen, as someone said it’s only British by name, it creates jobs in the area for suppliers too,and to a certain extent what happens with Britain and hard or soft Brexit is a critical factor, I wish him well and hope he can do what he said.

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