Why Jaguar is asking some dealers to give up their franchises by 2025

A picture is starting to develop of what Jaguar's U.S. dealership network might look like in 2025 when an all-electric and far more expensive three-vehicle lineup replaces today's models.

It will be smaller — perhaps dramatically so — and many sales could take place digitally as the storied brand looks to reinvent itself after a number of struggles dating back more than 50 years.

Since 1968, Jaguar has had four corporate owners. Its current owner, Tata Motors, bought the brand and Land Rover from Ford Motor Co. in 2008. In addition, Jaguar has dealt with labor issues and battled quality problems as well as suffered through product droughts, outdated plants, executive turmoil and other crises.

Jaguar Land Rover has started the process of reducing Jaguar stores by offering dealers extra allocations of hot-selling Land Rover nameplates, such as the redesigned Range Rover, Range Rover Sport and Defender, if they give up their Jaguar franchises. It's unclear how many dealers have already accepted the offer, and it could be as many as 40, said one dealer who has been following the situation but asked to not be identified.

According to the Automotive News Research & Data Center, Jaguar Land Rover started 2023 with 395 U.S. dealerships, the vast majority of which carry both brands in a dual showroom, with Jaguar on one side and Land Rover on the other.

When the current five-vehicle Jaguar lineup rides into the sunset in roughly a year and a half, the brand's dealership footprint could look more like that of ultraluxury brands it aspires to compete against such as Aston Martin and Bentley. Those brands each have fewer than 50 U.S. dealerships, with many clustered in major markets such as Los Angeles, New York and Miami.

In the United Kingdom, Jaguar plans to reduce the number of dealerships to around 20 from about 80 today, according to some media reports. Jaguar Land Rover this month issued a statement denying it has settled on its U.K. dealership count, saying: "Our objective is to build a stronger and more sustainably profitable Jaguar and Land Rover network for the future. We are consulting with our retail partners on how we achieve this objective, but it is too early to disclose details due to their commercial nature."

Jaguar Land Rover acknowledges changes are coming to Jaguar's retail footprint in the U.S., but, because plans are not finalized, officials won't give details.

"We plan to transform the way our customers in the U.S. purchase vehicles, by elevating the customer experience to be consistent, transparent and omni-channel, offering a seamless modern luxury purchase experience built on the latest digital infrastructure to serve them wherever and however they choose. We are progressing with our U.S. retailer network to put our customers at the center of everything we do and build a sustainable future for JLR and our retailers," the company wrote in a statement to Automotive News.

The move would largely mirror the strategy Jaguar's European dealers were told of recently. And it would be in keeping with JLR's corporate goal of adhering to consistent marketing, dealership facilities and advertising in its global markets.

The transformation is underway. Jaguar last week appointed a new brand director, Rawdon Glover, who will manage the line's transition.

Details of the offers to Jaguar dealers are sparse. Some have agreed to relinquish their franchises in return for a larger allotment of Land Rovers — at least two months' worth, according to the dealer who asked to not be identified — and the ability to continue providing parts and service for the current range of Jaguars, made up of the E-Pace, I-Pace and F-Pace crossovers, the XF sedan and the F-Type sports car.

Under the Reimagine plan created by former JLR CEO Thierry Bollore, who abruptly quit last year, Jaguar is paring its lineup and moving way upmarket. Reports out of the U.K. say Jaguar will offer three ultraluxury utility vehicles, all electric and all built on Jaguar's exclusive Panthera platform, with prices starting around $122,000 at today's exchange rates.

Jaguar's 2023 U.S. lineup starts around $48,000, and most vehicles top out around $80,000. Exclusive trims and SV performance options on the F-Pace and F-Type can push prices into six-figure territory.

JLR's interim CEO, Adrian Mardell, told reporters in January that Jaguar plans to preview its 2025 lineup this year. The job of overseeing the design of the new generation belongs to Gerry McGovern, JLR's chief creative officer. He has given only one hint of the 2025 lineup, calling it "a copy of nothing."

Under Ralf Speth, who was CEO from 2010 to 2020, Jaguar Land Rover dealers were required, at a cost of millions of dollars, to construct stores with dual showrooms that separated the Jaguar and Land Rover brands.

Alan Haig, president of Haig Partners, a buy-sell firm in Fort Lauderdale, Fla., said Jaguar Land Rover pushed Land Rover dealers to buy Jaguar dealerships and then combine the two brands into one building, and offered an incentive to do so.

"They wanted the Land Rover guy, which typically was a lot more profitable, to go buy the Jag dealer in town and then build a new facility," Haig recalled. "If they did that, they would get a Jaguar Land Rover add point somewhere else in a different market."

Haig said many Jaguar dealers held out for "a lot of money, and they were paid a lot of money for these Jag franchises, far more than they were really worth if there hadn't been this consolidation strategy."

Haig noted that most Land Rover dealers did end up acquiring nearby Jaguar stores and then built new, combined facilities.

But dealers who made that investment and now decide to give up the Jaguar brand have a few options for what to do with the empty half of the showroom.

Andy Vine, a Jaguar Land Rover dealer in Louisville, Ky., says dealers can use the space to highlight certified pre-owned vehicles or to separate luxurious Range Rovers or exclusive performance-oriented SV models from the more utilitarian Land Rovers.

"They are basically breaking the Land Rover line into three pillars," Vine told Automotive News. "Range Rover, Velar, Range Rover Sport and Evoque. Discovery and Discovery Sport, and then the Defender 90, 110 and 130. So you could build a showroom right now, no problem."

Jonathan Sobel, owner of Land Rover Manhattan in New York, said he resigned his Jaguar franchise in February.

He declined to comment on when he was first approached by the automaker or what he received in exchange.

Sobel, who acquired the store in 2017, said the dealership has no remaining new Jaguar inventory.

"Working with our factory partners, we retain the ability to service Jaguar vehicles and sell certified pre-owned ones so that we can better meet the needs of our customers," Sobel said.

The showroom area previously used for Jaguar is now additional space for Land Rover, Sobel said. Any signage or display items that reference Jaguar are in the process of being removed, he added.

Sobel estimated that at its peak, Jaguar represented between 15 and 20 percent of the dealership's new-vehicle sales.

Like most automakers, Jaguar Land Rover no longer reports monthly sales. But Jaguar sales have been skidding for years because of product misfires, such as the discontinued XE compact sedan and slow-selling I-Pace electric crossover, and production interruptions caused by COVID-19 and the microchip shortage. In 2022, JLR sold an estimated 9,128 Jaguars in the U.S., down 29 percent from 2021.

Joe Ozog, president of Ozog Consulting Group in Scottsdale, Ariz., said his firm has two separate buy-sell transactions involving Jaguar Land Rover dealerships on hold because of the uncertainty surrounding Jaguar.

Ozog said he has recently spoken with over a half-dozen JLR dealers across the country, and each said they're keeping the Jaguar franchise for now.

"They're not excited about it, and it creates uncertainty," Ozog said. "And uncertainty is never good in the auto space, especially on the retail side."

Haig said some dealers may believe there could be another change in JLR management and a reversal to keep the brand positioned where it is currently.

"It's just a tough pill for JLR dealers to swallow," Haig said. "They were forced to overpay for these Jag franchises, they were forced to build an extremely expensive and needlessly large facility to handle this plan for Jag to be more of a volume brand. Now they're being asked to give up this franchise and in return get a few more Land Rovers."