The car industry should be braced for more job redundancies as manufacturers and dealers seek to get ‘a piece of a smaller pie’, Pendragon CEO Bill Berman has said.
Speaking to Car Dealer, Berman explained the reasons behind today’s announcement of Pendragon axeing 1,800 jobs and closing 15 stores.
‘It’s a bitter-sweet day, said Berman. ‘The positive side is that on a run-rate basis, once we get through the redundancy charges, it’ll be an annual saving of approximately £40m.
‘We went into this pre-Covid with a strategic review, and with lockdown it gave us the time to put some effort and attention to this. We drew up store models, looked at how the businesses have come out since lockdown ended, and put together a new operating and business model.
‘We feel it will give us the ability to compete and not only survive but thrive.’
During our interview, which you can see above, Berman revealed that during lockdown, Pendragon management wasn’t ‘taking a break’ but ‘got to grips’ with focusing on offering cars for sale online.
‘We can sit here and sell a used vehicle 100 per cent online through all of our stores and all of our brands now,’ he said. ‘We’ll be able to do the same thing with new vehicles in the next few months – stem to stern, inclusive of everything.
‘Just under 20 per cent of our sales during June and July through our Car Store brand were pure digital sales with no interaction except the delivery of the vehicle. This led into our decision today – a new staffing and business model moving forwards. No-one was taking a break during lockdown – the minds and efforts of the management team were put to good use.’
Berman also warned that the dealer group was not alone, as other more efficiencies will be made by other dealers and car manufacturers.
He said: ‘I see a lot of it and I see a lot more of it will happen on the OEM side. My guess is that at some point over the next several months everyone will have some kind of restructuring cost-savings plan – they will have to and everyone is in the same boat.
‘Look at what Ford announced just before lockdown – they were going to get rid of half of their UK stores.
‘Some of our store closures – I won’t say which ones – were facilitated by the OEMs to improve their networks.
‘All OEMs are going to be looking at their network requirements, where they feel they might be over-represented. There will be fewer dealers and lower volumes.
‘The pie is going to get smaller and I just want to get a piece of that smaller pie. OEMs and our retail competitors are looking at it in the same light.’
It’s not just dealers that will be cut in efficient programmes but also brands, the Pendragon boss said.
‘I wouldn’t be surprised if someone comes out of the marketplace and I can see FCA and PSA looking at what they have and changing – they have a lot of brands competing against each other. Does that stay the way it is? Maybe or maybe not.
‘Mercedes in North America announced they were getting rid of seven model lines, and I think we will see a lot more of that. Everyone is financially constrained right now, looking at where the best place to operate is and where the best place to get your return on investment is.’
Up until the coronavirus pandemic, Pendragon was having a strong year, with January and February exceeding internal targets.
Only last month the dealer group announced a refreshed corporate identity with ‘powered by Pendragon’ positioned alongside its Evans Halshaw, Car Store and Stratstone brands, as reported by Car Dealer.
- Got a beef with your car manufacturer? Love your suppliers? Tell us why in our Car Dealer Power survey here.
- Get the latest news updates in our WhatsApp group. Broadcast only, headlines direct to your phone. Send us a message and ask to join here.
- There’s a fresh new design and exclusive content for Car Dealer! Download issue 149 for free here.