Troubled German car-maker Volkswagen is considering cutting the number of its new-car dealerships in Northern Ireland from more than a dozen to just two as part of a wider group plan to slash costs by €10 billion.
It is understood that the VW Group wants to reduce its current UK business partnerships from 170 to fewer than 25.
And one industry source told the Irish News that Northern Ireland “will take a significant hit”, with VW likely to select just two preferred suppliers - one in Belfast and a second west of the Bann, possibly in the Dungannon area.
In such a scenario, that would leave a number of long-established dealerships in places like Derry, Lisburn, Cookstown, Coleraine, Portadown to either close their new VW operations altogether, flip to a less lucrative used-car business, or seek a franchise from a completely different motor brand.
It is thought that a letter has gone to some of the VW dealerships in the north setting out the company’s position.
A VW spokesman told the Irish News: “Volkswagen Group UK, and indeed the whole motor industry, is moving through a period of unprecedented change, prompted by electrification, online sales and new customer expectations.
“As part of these changes, our network is also evolving and will ultimately comprise fewer locations, operated by a reduced number of investors.
“This model is designed to ensure we can sustain an effective and financially-viable investor network, bringing high quality service for customers.”
The statement added: “We believe the investors we have identified are best able to serve our existing and future customers in Northern Ireland.
“Our decisions have been based on a number of factors, including investors’ ability to represent and invest in a wide range of Volkswagen Group brands.
“From a customer point of view, we are confident that we will maintain a focused, sustainable network, and we will work carefully with any new or expanded investor partners in the province to ensure this is their primary concern.”
Wolfsburg headquartered Volkswagen, which had already been rocked by an emissions scandal back in 2015 which saw the company forced into a multi-billion euro settlement, is enduring another torrid time, in which it is even considering closing factories in Germany for the first time in its 87-year history.
And a drastic fall in sales, equivalent to the output of two plants, means painful cuts are inevitable if the group is to survive the next two years.
A report in Fortune Europe said VW is stuck in a massive cost clear-out as it seeks to calm investors amid fears of falling EV demand, including offering long-term employees enhanced redundancy terms in a bid to cut its 680,000-strong workforce by up to 20%.
VW had previously agreed to reduce its costs by €10 billion as fears mounted over a slowdown in the uptake of its electric vehicle models (many of which have been panned by critics) and new competition.
Its transition to electric car production has been complicated by fast-moving competition from Tesla and, increasingly, new rivals from China.
In March, the group confirmed that 30 new models are due to be released this year, comprising a mix of hybrid, electric, and internal combustion engine vehicles.
“We are aware that current public debate is somewhat critical in terms of electric mobility, but we are convinced the future will be electric,” Volkswagen told investors at the time.
No dealership in the north has commented on VW’s plans to the Irish News.
