Vauxhall boss: 'The car industry has evolved'

Stephen Norman says the now French-owned carmaker's troubles are not over, but the popularity of the Corsa is one reason to be optimistic

Vauxhall cars
Vauxhall cars

It’s a good day as far as Stephen Norman, managing director of Vauxhall UK, is concerned. In fact, the 65-year-old is ebullient.

He’s speaking hours after new car sales figures for July were posted, showing that in the month registrations rose for the first time this year, up 11pc.

Even before demand was hammered by coronavirus, motorists were shying away from purchases as wider economic concerns weighed.  It’s only a glimmer of hope but Norman readily accepts the numbers don’t mean the industry’s troubles are over.

What’s got him particularly perky is a nugget he’s spotted in data.

Vauxhall’s little Corsa, a favourite for boy racers, was for a second month the UK’s best-selling car, ahead of rival Ford’s Fiesta. “We saw a massive increase in the interest for the Corsa in spite of what Andy Barratt [Ford of Britain managing director] said on Radio 4,” says Norman, taking a sly dig at his rival for not correcting the BBC’s Today programme when it pronounced the Fiesta as the country’s most popular vehicle. 

Norman attributes the bounce back in sales to a combination of factors. “People want small economical transport,” he says, referring to government guidelines to avoid public transport if possible. The second – and he apologises for “sounding flippant when I say this” – is that “there’s an element of sex appeal in the purchase of a new motor vehicle”.

Coronavirus has meant drivers have held off making major purchases but Norman, who has a background in marketing and took up the role two and a half year ago, thinks people have missed buying cars.

Vauxhall boss Stephen Norman

Even when the pandemic was at its height and lockdown controls their tightest, online interest in buying a Vauxhall only fell 50pc.

“The industry might have lost 90pc of its business in sales during the pandemic but the online interest, the number of clicks, the lead generation, only halved,” says Norman. “I’ve lived in five countries across Europe during my career and in the UK the car is King. Perhaps that capital K is a little smaller now, but it is still there.”

Still, Vauxhall’s factory at Port Ellesmere which produces the Astra remains shuttered since closing because of the lockdown. It’s not due to begin building cars for almost a fortnight, while the rest of the UK’s car industry has restarted work.

That can’t be a hopeful sign for Vauxhall, which is owned by France’s PSA Groupe, who bought it from GM three years ago.

Norman takes a jab at journalists for being too quick to run down the car industry. “Many people in the media have been asking ‘what are you going too do with all the cars you have parked in aerodromes’. Well, we don’t have cars parked on aerodromes. Since PSA bought the business we’ve been moving to build to order.”

Demand for the cars built at Ellesmere Port, mainly estates, means there’s no need to restart the factory yet and build up stocks of unsold cars, he adds. It’s a different picture at the company’s van-making plant at Luton.

Work restarted there in mid-May and demand has been so strong a third shift was added in July, with volunteers from Ellesmere Port drafted in to boost the numbers.

Despite the contrast between the two plants, Norman isn’t too concerned about Ellesmere’s standing silent.

“The industry has evolved,” he says. “If I go back to my British Leyland days, we would say a factory was under capacity if all of the production lines weren’t working 24 hours a day, seven days a week. Now, not all big plants have several production lines, and don’t require three shifts to be profitable.

“People still have this idea going back to Red Robbo that cars will stacked up to the ceiling,” says Norman, referring to trade unionist Derek Robinson, who led more than 500 walkouts at British Leyland in the Seventies. “The industry hasn’t worked like that since the Eighties.”

However, there are worries about the future of Ellesmere, largely because of Brexit.

No free trade deal and the imposition of 10pc tariffs under WTO would deal a blow to its competitiveness. Carlos Tavares, PSA’s boss, says he is “eager to invest at Ellesmere if there is a business case”.

Time is running out, not only for the Government to secure a deal, but also for the plant itself, with the current model of the Astra built there coming to the end of its life.

Norman has an interesting take on the plant. He follows his boss’s views, saying Ellesmere’s “future is very much dependent on the outcome of Brexit discussions”, adding that without a trade deal “there would have to be an independent agreement between the Government and the PSA”.

Basically, PSA wants a taxpayer-funded bung to offset the impact of Brexit to keep Ellesmere open? 

Norman puts it a little more delicately: “If production there was rendered uncompetitive, there would have to some form of an agreement to offset that penalty, wouldn’t there?”

The last time the Government tried that was in 2016 with Nissan and it didn’t work out so well. The Japanese motor manufacturer’s then boss Carlos Ghosn met Theresa May at No 10, saying after the talks he was “confident the Government will continue to ensure the UK remains a competitive place to do business”, a reversal of his earlier stance. 

Ministers initially denied Nissan had been offered a sweetheart deal, but it later turned out the company would get “support in areas such as skills, R&D and innovation” worth up to £80m.

This turned out to be worthless, with Nissan reversing on pledges to build a new model at its Sunderland plant – partly because of Brexit concerns.

How Mrs May’s successor feels about the political risks and payoffs of such an approach in the event of no deal is yet to be discovered. However, Norman’s “opinion is that Ellesmere will not close”.

Asked why, he cites his long relationship with Tavares.

“I know who I’ve worked for nearly 20 years,” says Norman. “I know the way he works. If he had been thinking otherwise we would have known about it.” And he cautions against “underestimating the efficiency” of British car plants, and the importance of having factories close to their end markets.

The “natural size” of the UK car market is between 1.6m and 1.8m new vehicles a year, according to Norman, with the 2m-plus levels of the mid-2010s the result of “overheating” caused by offers as many manufacturers forced vehicles into the market, cutting margins.

Even at the smaller size he predicts, the UK remains attractive. “Mr Tavares looks at production plants as production plants,” Norman says. “He looks at their efficiency, competitiveness and their closeness to their customers. He looks at the UK and he sees it as an extremely important market, one of the biggest in the world. To have a production facility in such a market makes total sense.”

And for all the criticism PSA has drawn for threatening noises about Ellesmere Port, he fires another shot at rival manufacturers. 

“We’re not the worst enemies of car production in this country,” Norman says. “Some of our competitors will possibly regret no longer having production in the UK.” Although not afraid to take swipes at rivals, he says the industry must work together to meet the challenge of going green, such as the UK’s ban on the sale of new cars with petrol or diesel engines in 2035. He adds: “The industry has accepted the deadline, so I have to toe the line of the party.”

But doing so is going to cost, according to Norman. And not just to the car makers, but the consumer, too. “Not one manufacturer has said it cannot be done,” he says.

“By putting all our resources together – brainpower and financial – we can make a zero emission vehicle that is no more expensive for the consumer to operate over three or four years than a conventional one. “And by all of our resources I’m thinking a large part of our profit margins, but something has to give on the other side of the equation, whether’s that cost or taxation.”   

But it’s not all doom, gloom and higher costs when it comes to British motoring. In fact, Norman, who has spent more than two decades of this 42-year career working in other nation’s automotive sectors, says the UK industry remains something of a powerhouse.

“One thing that we don’t realise in the UK motor industry is how valuable we are outside the UK,” he says. “Look across the world, you will see that people trade in the UK industry.”

Vauxhall might only be a small part of PSA’s portfolio, but with Norman fighting for it, it’s punching above its weight.