UK dealers face service centre dilemma after virus lockdown

Automotive Industry

Source: Automotive News Europe, 2020-03-24

UK dealer groups have taken different approaches on whether to keep their service centres open after the British government ordered nonessential businesses to close to prevent the spread of the coronavirus. 

Dealerships can keep open their service centres for repair work under lockdown measures that follow other European countries in restricting people's movement during the pandemic.

Marshalls Motor Group, which has 117 franchise outlets, said it was aiming to keep open its aftersales and repair operations to provide servicing for vehicles needed "in the public interest" such as food delivery vans and emergency service vehicles.  

Pendragon, Europe's fourth-biggest dealer group, said it will temporarily close retail stores across the UK. Pendragon's Evans Halshaw and Stratstone divisions said they will continue to operate servicing and repairs at some dealerships for first responder vehicles and cars belonging to selected key workers.

Pendragon is Europe's fourth-biggest dealer group by revenue, according to Automotive News Europe's ranking.

Ford said its TrustFord manufacturer-owned retail network will maintain a skeleton aftersales function to keep the health workers and key workers listed under the government’s official list on the road.

Lookers, which has 160 dealerships in UK and Ireland, said it was closing all showrooms and service departments starting Tuesday 24 March.  Lookers is Europe's third-largest independent dealer group. Lookers said its online platforms would remain operational.

Vertu, which has 130 dealerships in the UK, also said it was shutting both its showrooms and service centres. "If you are booked in for a service today, please do not attend," the company said on a message on its website. 

Arnold Clark said on its website that it will halt operations at all its UK dealerships. The company is Europe's fifth-largest independent car retailer.

Prime Minister Boris Johnson's government is still refining the advice it is giving businesses as which services can continue.

On Tuesday, the government said it still required cars and vans to over three years old to be put through annual roadworthiness tests, called MoTs, which form a big part of service center operations. However, it also said it was delaying tests for heavy commercial vehicles, including buses, for three months.  

The National Franchised Dealers (NFDA), which represents franchised car and commercial vehicle retailers in the UK, said the government needed to make the situation clear.

"It is crucial that franchised dealers' workshops stay open to help the government meet its goal of keeping freight transport on the roads operating, by ensuring that thousands of vans and smaller commercial vehicles will continue to able to be serviced and repaired," Sue Robinson, Director of the NFDA, said in a statement.  

Dealers are bracing themselves for the financial hit to sales.

Marshalls is suspending the payment of dividends to shareholders for the 2019 financial year "in light of these unprecedented circumstances," the group said in a statement to the London Stock Exchange.  

The company said it had financial reserves to withstand the impact of the closure of its sites to "well beyond the end of June 2020." 

Lookers will cut costs by temporarily reducing the salaries of its senior management, the company said in a statement to the London Stock Exchange. It would not recommend the payment of a dividend for the financial year ending December 2019.

Lookers' chief executive and operating chief departed in November, after the company sounded a second profit warning within a few months as the British car market struggled with dwindling consumer demand and margin pressures.

The company said it was too early to make any reasonable estimate of the financial impact of the coronavirus on the group during 2020 and beyond.

Along with the Netherlands, the UK was one of the last major European markets where dealers were still selling cars as normal. Dutch dealers are currently still allowed to stay open.

In countries including Germany, France, Spain and Italy that have imposed lockdowns, automakers are working to provide support to independent and manufacturer-owned dealerships, although dealer bodies fear the help will not be enough to prevent bankruptcies.

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