Vauxhall must rebuild momentum around its hugely significant new Corsa, having been hit hard by lockdown occurring at the time of the supermini’s launch, according to its boss.
In a recent Autocar Business Live online seminar, Stephen Norman said: “Unfortunately, the lockdown came bang in the middle of the Corsa launch. We were in the midst of launching petrol and diesel versions and, to be frank, the lockdown has suspended our ambition for the brand because of that for at least six months. The lockdown may only have been two or three months, but it has certainly made a dent in the run rate we intended to build up to.”However, Norman remains positive about Vauxhall, saying it “has a job to do in marketing terms to build [Corsa] demand back up to where it was before lockdown”, and adding that the recently revealed new Mokka SUV would also help its cause. “There’s nothing like a new product to restate your case.”
The state of sales
It’s estimated that about 500,000 cars have been taken out of the market this year, due to Covid-19. Given Vauxhall’s intended 7.5% market share, Norman believes the pandemic has cost the firm 37,500 sales. “That’s the big hit,” he said.
September sales are in line with last year for Vauxhall, so Norman believes it’s the final quarter of the year that will give the best prediction for 2021. “In June, straight after lockdown, we were able to deliver dealer stock that had been primarily ordered before and during lockdown,” he said. “In July and August, we saw very strong demand from customers who were unable to place orders during lockdown and undoubtedly encouraged by government guidelines to use personal transport rather than public transport. In September, we were even-stevens.”
Unemployment in all sectors at the end of the furlough scheme and the impact that could have on vehicle demand is “one of the uncertainties we’ll have to face in Q4 and Q1 of next year,” Norman added.
Ellesmere Port’s future
Despite the massive hit that UK car production has been dealt by the pandemic (it was down 44% year on year in August), Norman categorically stated that the future of Vauxhall’s Ellesmere Port factory will be decided by other factors.
“The Ellesmere Port situation isn’t a Covid situation but a situation that has everything to do with the cost of manufacture and the tariff situation which will be ours after 31 December,” he said.“When we get to the next production allocation to Ellesmere Port, the situation will be radically different. I’m not pessimistic about that but, as [PSA Group boss] Carlos Tavares has said, that product allocation can only be made when there’s clarity on the Brexit situation.
“If we get a free trade agreement with Europe, then I’m not at all pessimistic about Ellesmere Port. If, on the other hand, we have obstacle after obstacle, it will be difficult for everybody who is manufacturing in the UK.”
Meanwhile, the Luton plant where the Vauxhall Vivaro and other PSA Group vans are built is looking healthy and now running at a similar rate to this time last year, at around 60,000-70,000 units annually. “It has the potential to build over 100,000 units,” said Norman. “There’s incredible pent-up demand for vans.”Going electric
One specific area of demand for vans is the new Vivaro-e, said Norman. “The strongest, unstimulated demand for EVs that Vauxhall has today is for the electric Vivaro van, where we have several thousand customer orders for delivery in coming weeks and months. The demand, not just for the last mile but for genuine transportation of objects, is going to surprise everybody.”
Vauxhall is also aiming for its Corsa-e to be the best-selling electric car in the UK next year, despite getting off to a slow start because of the pandemic. Norman said interest in smaller EVs is “aroused by what we’re hearing from authorities and a genuine desire from consumers to be green”.
However, he warned of confusing messages about hybrids affecting uptake: “The conflicting messages on hybrid taxation and fiscal measures mean it’s very difficult to see what the residual value of these vehicles will be, and that obviously disturbs demand.”What’s next for Vauxhall?
Norman describes Vauxhalls as “everyday transport providing unbeatable quality for people who don’t want to pay through the nose.” However, he acknowledged that the new Corsa is clearly more expensive than its predecessor but anticipates that customers will grasp the improvements made.
“We do expect people to see the difference in terms of world-leading technology from PSA Group – engines, gearboxes, suspensions, equipment levels – and we do expect people to pay the market price for a Vauxhall, whereas in the past they were selling on price alone.”He considers that Vauxhall sits “bang in the middle” of the PSA Group brand portfolio, describing Peugeot as “a little north of centre”. Beyond Vauxhall’s core models, its VXR performance badge will now be used on electric models only, first on versions of the Corsa and Vivaro – “and yes, we will go into racing with the Corsa”.
Vauxhall boss Stephen Norman on…
“I wouldn’t be on this Autocar Business Live if we weren’t achieving [profitability] on a monthly basis. The way the company is managed is based on results. [PSA Group boss] Carlos Tavares talks unashamedly about what he calls Darwinism. It may be harsh for some people, but when you’re at the front line of industry, such as retailers, I’m afraid to tell you that it is Darwinism.”…on profit margins
“Small cars can be highly profitable; it depends how efficient you are at making them and marketing them. Because the sector is so massive, you can make significant sums of money. Elsewhere, it’s extremely difficult with the cost of batteries and total cost of ownership to make a healthy margin selling an electric vehicle or hybrid today.”
“Our ‘British brand since 1903’ slogan, which we came up with in April 2018, has been incredibly successful. People won’t buy a Vauxhall because it’s a British brand, but it is a differentiator.”…discounts
“If there’s one thing Vauxhall has been very good at, it has been discounting. I think we’re among the few that would openly say that. It’s getting better but by no means where it needs to be. As an industry, we’re oversupplying the European market to such a degree that there are too many cars chasing too few customers. So in order to make the number of customers fit the number of cars we produce, particularly when we close the month or the year, obviously the number of discounts goes up. I don’t think it has to be eliminated, but I have said it does need to be better controlled.”
“Why would you want to make a premium-brand customer pay for a proportion of a 24-hours-a-day illuminated cathedral which is only open for eight hours [a day]? I’m not suggesting that you need to go onto an Arthur Daley parking lot to buy a new vehicle, but I don’t believe that the premium customer needs to have the impression of being in a men’s-only club in Pall Mall.”