UK car retailer Pendragon is to cut around 1,800 jobs as it accelerates a review of its business model and reacts to the COVID-19 pandemic.
The Nottingham-based publicly listed car retail group is the UK's second largest and the move will fuel concerns over job losses in the UK's automotive retail sector as a result of the coronavirus pandemic and much-reduced sales volumes.
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The company said the board has 'taken the decision to introduce a more efficient operating model with fewer stores and leaner support functions'.
A total of 15 stores will be closed as a result of the review (7 freehold and 8 leasehold). Pendragon said the stores are predominantly loss-making and are therefore no longer expected to be viable.
A total of approximately 400 redundancies are expected from these locations.
Pendragon also said a leaner and more sustainable operating model is necessary to safeguard the Pendragon business and position it to deliver improved results over the short- to medium-term, against what is expected to 'remain a challenging economic environment'. It said the changes follow work undertaken pre-Covid-19 and 'follow efficiency gains achieved during the lockdown and in the subsequent reopening programme'.
The proposed changes to Pendragon's operating model are expected to result in approximately 1,400 redundancies and, subject to consultation, are expected to deliver an annual reduction in costs of approximately GBP35m.
In total, as a result of the store estate reductions and operational structure changes there will be approximately 1,800 redundancies.
Bill Berman, Chief Executive Officer, said: "The above proposals reflect our intention to create a resilient, leaner and more profitable business across the entire group. These have been difficult decisions for the Board to make and our priority now is to manage the transition to our new operating model. The COVID-19 pandemic is a uniquely challenging situation and we want to protect as many jobs as we can sustainably and the proposed redundancies are, of course, extremely regrettable. During the pandemic we have focused on ways to improve workflow, efficiency and our digital capabilities. It is paramount that we embed these behaviours into all areas of the business, as we expect the economic environment to remain challenging. The actions that we are undertaking are for the long-term health and success of the group and ensure that we emerge from the pandemic as a more competitive and stronger business with the ability to thrive in the future.
"I would like to take this opportunity to thank every one of our employees for the hard work that has been done to reopen our businesses from lockdown. I am proud of the essential work we undertook to assist key workers during lockdown and for the way we have served our customers in store and online during these difficult times."
