Interview – Steve Norman, Managing Director, Vauxhall

Interview - Steve Norman

An Interview With The Managing Director of Vauxhall

Steve Norman has been running Vauxhall and Opel operations in the UK and Ireland respectively for 18 months, since the PSA Group bought the marques from General Motors. He was charged with a return to profitability – a goal that has inevitably wrought change for the brands and their retailers.

Having started in 1976 with The Rover Group, where he rose to become marketing director, Norman made his name as head of Volkswagen in France and as Fiat’s global marketing director, before joining Renault in 2008 to lead marketing and comms. He came out of a brief retirement to join PSA in 2014.

What’s your goal for Vauxhall?

“Profitable volume growth, with equal importance on both sides of that equation; it’s not volume growth at the expense of profit, and it’s not profit at the expense of volume.

“A Vauxhall is a great car for the modest man, and if that doesn’t sound inspirational, I’d argue that it’s not meant to be inspirational to people who desperately need a premium German brand to exist socially.

“Volume has been part of Vauxhall’s culture since 1939. The issue is volume prices put pressure on profit, because our parts are just as good and as expensive as anyone else’s.”

Do you have the ingredients to deliver your goal?

“We’re making good progress, but the job’s not done. There are three principal thrusts, starting with significant improvements in terms of the quality of the service we give at the point of purchase – online or offline – and then service quality in terms of aftersales.

“We want to be on the podium – excluding nobody – for purchase satisfaction score and service satisfaction score by 2021. That’s a hell of a task.

“Then there’s the brand. It has three clear values: we want to be approachable, progressive and ingenious – so solutions to technical problems may not be the classical ones. Vauxhall has always been approachable, but I’m not sure we’ve been progressive or ingenious enough in recent years.”

Is the UK market really ripe for profitable volume growth?

“The UK market is so over-supplied and over-invested that it’s extremely difficult to make decent unit margins. I think that’s true of almost all brands.

“Just how profitable the UK market can become, leaving exchange rates aside, will be almost totally dependent not on Brexit but on right-sizing. The industry has been pushing in so much volume that we’re over-supplied with cars. I’d say south of two million [sales per year] is healthy – so at least 10-15% below where we are now.

“Who blinks first will be interesting. Brexit could be a trigger. But the issue is we’re part of a supply chain that relies on a certain volume of registrations to get certain unit costs from the factories and so on. The machine needs to keep moving, and the UK has a large population and is relatively well off. Compare what we take with what we need and you see massive over-consumption.

“The van market is different, though. It could grow more.”

What was your first task when you arrived at Vauxhall?

“There were many, but very rapidly after arriving I decided that the principle issue facing the brand was marketing. That doesn’t mean marketing was done badly, just that it didn’t meet what I felt was needed.

“The agency asked how long they had, thinking it’d be the typical six months. I said: ‘Well, three weeks will scare you, so how about six weeks?’. And that’s what we did. We didn’t have time to mess around.”

‘There’s no reason why Vauxhall can’t be as successful as Volkswagen in the UK’

Is that where ‘British Brand Since 1903’ came from?

“Yes. It’s not forever and its arrival during the Brexit discussions was a coincidence. Britishness alone isn’t going to sell cars, but it’s a differentiator. Our cars must be good enough, but we want to stand out and in turn be considered by buyers.

What else did you change?

“When I joined, I made a point of not rejecting what I found on the basis that it wasn’t mine. I’ve rearranged a few things, but I haven’t thrown anything out. This is a great brand with tremendous potential. We just needed to be a bit more strategic and visionary in the way we think of that potential.

“One slight insight is that the company felt a bit defeatist. That’s certainly something I’ve tried to change. That doesn’t mean it works when we try, but there’s certainly no reason why Vauxhall can’t be as successful as Volkswagen in the UK. It’ll take time, but it can be done.”

How have the retailers reacted to your arrival?

“A few weeks in, I rang the head of the dealer council at the time and asked what was happening. He said to me: ‘We’re waiting for your strategic vision.’ It was like manna from heaven. At that point, I knew what they were expecting of me. It took a few weeks to write, and then we took it to them. Their initial reaction was to say it wouldn’t be easy – not least because profitability implies increased pricing for the consumer. But the PSA Group has shown that it can achieve such things.”

Are Vauxhall cars aspired to?

“Not enough. We have the most fantastically loyal customer base, but our level of conquest is woefully inadequate.

“The new products can change that, so long as we get the marketing right. We badly needed vehicles that had spontaneous desirability levels, and now that’s what we’re getting, especially with the new Corsa and Mokka X. You can also see the change already happening with our new vans.”

Why do retailers of modest cars need costly, manufacturer-prescribed outlets?

“They don’t. The cost base must come down. I believe we’re realistic there, and I have issues with some of the massive facilities with extremely expensive content I’ve seen go up for the premium brands. “I’m not saying there should be spit and sawdust on the floor, but there has to be a happy medium, else we haven’t learnt any of the contemporary lessons. Who expects Poltrona Frau sofas? If you do, you haven’t seen what’s happening in the world, have you?”

Does a shrinking market mean you need fewer retailers?

“We’ve gone from a peak of around 330 to 260. Will there be a further consolidation? Possibly. In fact, you could say probably. That cut was a first step. We’ve been pumping so many vehicles through the UK, and if you cut that – which you can do while maintaining or boosting profit – the total falls.

“Another issue will be the investments we’ll be asking our retailers to make, notably in electrification equipment. It won’t be viable for all. I’d look to Volkswagen’s 220 retailers and say they’re right-sized.”

Doesn’t that mean more bad news for Vauxhall dealers?

“Sometimes you have to ruffle feathers, but the baseline is that the network know bloody well that they’re indispensable.

“We’ve all got responsibility for getting the good times rolling, but the retailers are guiding us every step of the way. The consumer tells them what they want and they tell us what the consumer wants. We’re beholden to them.”

Are all your cars profitable for you and for retailers today?

“I’m not supposed to answer that, but in simple terms, the PSA-based cars are already profitable, plus the vans. We have some good new products coming soon, too.”

Can electric cars be profitable?

“If they can’t be, we’re all condemned. So the answer has to be yes. Initially, it won’t be loss-making. I don’t believe there’s any manufacturer that’s going to go into electrification and lose money. There may be some who do by accident, but you certainly don’t desire to. We’ll at the very least break even or make small profits on the first electric vehicles.”

Where does that leave diesel?

“I’m not an expert, but there’s a PSA theory that it could rise again as emissions regulations tighten. The issue is the amount of noise in the anti-diesel narrative. Government sets the rhetoric, and I don’t think it’s too late to change it.”

Do you feel the pressure from Carlos Tavares at PSA HQ?

“I bother him as little as possible, and he sees our results on a daily and weekly basis, so he knows what’s happening without feeling my collar. In fact, one of my motivations to deliver results is keeping off his radar!

“He’s never let me down, and I’m not about to let him down.”

You’ve retired once before; will you see this through?

“Yes. I have a contract until March 2021, and I don’t intend to stop there.”

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