JLR sticks with dealer partners as it cancels agency plans

JLR has informed its dealer partners that they will no longer be transitioned to the agency model later this year but instead continue with a revamped version of their current wholesale arrangement. The change to an agency model would have had JLR taking full control of the car-buying process, be it online or in the showroom, and giving dealers – or rather agents – a fixed fee for each sale. Mercedes-Benz was a pioneer of the agency model in the UK, and has since been followed into direct sales by Cupra, Polestar, Tesla and Volvo, to name a few. Direct sales allow car makers to more closely control retail costs, develop closer relationships with their buyers and ultimately retain more of the revenue generated by selling cars. By contrast, the wholesale model – which JLR is sticking with – has makers selling cars to dealers, who are free to set their own discounts, which promotes haggling and can have an impact on residual values. A year ago, JLR confirmed plans to shift all its dealers to the agency model as it ushered in the new ‘house of brands’ showroom structure - whereby Defender, Jaguar, Range Rover and Discovery would be carved out as individual brands with their own distinctive marketing and retail strategies. Confirming the plans a year ago, JLR UK managing director Patrick McGillicuddy told Autocar that strengthening the luxury credentials of these four brands would require a new approach to retail: “If we are to fulfil our ambition to have luxury brands, then price cannot be an element of that transaction.” He also cited the benefits of being able to roll out a universal design and buying experience across all JLR showrooms and operate on a more flexible basis by, for example, opening up new ‘boutique’ showrooms to promote new models. JLR will continue to sell cars directly online as its retail partners handle physical sales at showrooms across the UK. The 'house of brands' ethos survives despite JLR now moving away from the agency model, and the brand believes it can still offer “a client-centric retail experience” by using a "refined" franchise structure that majors on "concierge levels" of customer treatment. JLR has previously spoken of the “warmer, more relaxed” atmosphere it wants to promote in its dealerships, doing away with the minimalist, neutral-themed ‘Arch’ design language that has defined its dealerships for the past decade. McGillicuddy has now hailed the effort JLR’s retail partners have gone to in order “to deliver the perfect experience for our clients”. He added: “Taking into consideration the internal and external challenges afoot and the scale of change required to maintain a sustainable, profitable business, our retail strategy offers a unique and exciting opportunity for JLR and our partners. “Our commitment to the Reimagine strategy and bringing that to life in the UK remains unchanged. What we have developed in with our partners is significant. Together, we will deliver benchmark experiences for the luxury sector and our clients will be at the heart of that.” Darren Edwards, boss of Sytner, the UK’s largest dealer network, said: “JLR is to be applauded for adapting to the rapidly changing dynamics we have witnessed in the UK new car market. “The franchise model is a tried and trusted model which can be intelligently flexed to suit the needs of all stakeholders involved in a new car transaction, ie clients, retailers and manufacturers. "Sytner Group is convinced that the model JLR has created will provide a genuine modern luxury experience for our clients and look forward to many years of continued mutual success.” He was echoed by Robert Forrester, CEO of Vertu Motors, who said: “JLR and Vertu have always had a close business relationship and, as one of its major partners, we are committed to ensuring our mutual clients continue to enjoy its iconic products and receive a fantastic modern, luxury experience. "The news that the franchise model will be retained is a decision that was made in consultation with the investor community and provides the stability to progress with delivering innovative services to our clients without distraction. On this basis, we welcome the news.”