UK firm to axe almost one-in-five jobs to help save £50m as car sales slump during Covid-19 crisis
Would-be buyers pictured at Vauxhall Lookers in Speke, Liverpool, after car showrooms reopened for the first time since lockdown.
Photograph: Peter Byrne/PA
The car dealership chain Lookers plans to cut 1,500 jobs and close 12 dealerships as it returns to selling and servicing vehicles after the coronavirus shutdown.
The group, which operates 164 car dealerships, said the redundancies were needed to protect the long-term future of the business and it hopes to save £50m a year from the job cuts.
The firm will begin consultations on the redundancies shortly, which will reduce its workforce by almost 20%.
The company, which sells vehicles for large manufacturers including Toyota, Ford and Volkswagen, as well as luxury brands such as Aston Martin, Bentley and Ferrari, intends to close, consolidate or refranchise 12 dealerships.
These are in addition to 15 closures announced in November 2019. It plans to complete the closures in the second half of this year, leaving the company with 136 dealerships.
Lookers has gradually reopened its sites since closing all of them on 23 March, and has introduced a contactless vehicle handover and delivery process.
It said it took orders for 2,865 new and used cars in the last fortnight – half the number of sales compared with the same period in 2019.
The group said customer demand for aftersales service was “encouraging” and it intends to bring extra technicians back from furlough as demand increases.
The company has furloughed about two-thirds of its 8,100 staff, and intends to bring 10% of workers back in June.
Mark Raban, Looker’s chief executive, said the company was pleased to have reopened its dealerships in a way that was safe for customers and workers.
“We have taken the decision to restructure the size of the group’s dealership estate to position the business for a sustainable future, which regrettably means redundancy consultation with a number of our colleagues,” he said. “This has been a very difficult decision and we will be supporting our people as much as possible throughout the process.”
The company has received the initial results of an investigation into a potential fraud in one operating division of the business, which delayed the publication of its 2019 results.
It said the initial findings from the accountancy firm Grant Thornton highlighted areas where financial controls needed strengthening to avoid accounting irregularities being repeated in future.
The group said the investigation had shown the need for it to strengthen some “behavioural and cultural aspects relating to its control environment” and it was taking action to remedy this.
The review by Grant Thornton is in addition to an investigation into Lookers by the Financial Conduct Authority for “control issues in [its] sales process” between 2016 and 2019.
The company intends to publish its 2019 results by the end of June.