Automotive News Canada - June 2024 - 19

* JUNE 2024
19
Jaguar dealers want better
compensation to give up stores
CONTINUED FROM PAGE 1
industry source said. Of the 30 franchises
that sold Jaguar and Land Rover vehicles
coast to coast, three Jaguar outlets
have been returned to the company. That
includes Jaguar Moncton, which Steele
closed in 2023, according to court documents.
The 27 other outlets continue to
sell both Jaguar and Land Rover brands
at dual showrooms despite company pressure
stretching back to 2022, the source
said.
JLR Canada did not directly respond to
questions about its plans for the Jaguar
brand, nor would it say how many Jaguar
dealerships it aims to have in Canada once
it has completed its transition plan. In an
emailed statement, company spokesperson
Taylor Hoel said the company would
not comment on " any retailer issues or
discussions with our retailers " but that
JLR Canada has " made clear " it remains
committed to a " franchised retail network
working to serve our clients wherever and
however they shop. "
ULTRALUXURY VEHICLES AND PRICE
JLR, owned by Tata Motors of India, has
been working to reposition Jaguar globally
under its Reimagine strategy. Dealers
would sell only electric vehicles by 2025
while moving into the ultraluxury segment.
Prices in Canada are not known,
but in the United States they would start
at about US $125,000, according to sibling
publication Automotive News.
The lowest-priced vehicle in Canada
now is the E-Pace compact utility vehicle
at about $61,000 including delivery, according
to the company's website.
Jaguar also is expected to trim its lineup
to three electric models from five by
middecade in Canada as well as move sales
largely online, providing what it describes
as a " modern luxury " experience.
In the United States, dealers have been
offered extra allocations of Land Rover
nameplates if they give up their Jaguar
franchises. They will also retain the ability
to service Jaguar vehicles and sell certified
used Jaguars.
About one-quarter of U.S. JLR dealers
have taken the company up on the
offer. There were 195 Jaguar stores in the
United States to start 2023, according to
the Automotive News Research & Data
Center. JLR confirmed to Automotive
News that in early June the store count
stood at 144.
The company is applying the same strategy
in Canada.
According to a corporate memo
obtained by Automotive News Canada,
JLR Canada offered dealers the ability to
" voluntarily return " their Jaguar franchise
in exchange for greater Land Rover
allocations, the five-year service agreement
and the ability to sell certified used
Jaguars.
JLR Canada " appreciates and understands
that some retailers may no longer
want to stay with and invest in the Jaguar
brand as Jaguar transitions upmarket to
an entirely electric-vehicle lineup, " said
the September 2022 memo.
" In order to assist retailers with the
Reimagine plan transition, JLRC is revising
its Jaguar and Land Rover framework
to provide retailers the opportunity to
move forward with only the Land Rover
brand. "
The company initially gave dealers until
Nov. 30, 2022, to express their intention to
relinquish their Jaguar franchise.
'DEAD LAST' IN DEALER SATISFACTION
As JLR Canada has worked to reposition
Jaguar, the company has fallen to
" dead last " in the Canadian Automobile
Dealers Association's (CADA) annual
Dealer Satisfaction Index. Dealers have
rated JLR as the brand they were least satisfied
with since 2021, one dealer said.
The roots of the tension, however,
stretch back significantly further.
In 2013, JLR began trumpeting ambitious
plans to grow global volumes to
one million vehicle sales per year. With
Canadian sales representing about two
per cent of JLR's overall market, Canada's
share of that growth equates to about
20,000 vehicles, one dealer said. That
breaks down further to 12,000 Land Rovers
and 8,000 Jaguars in Canada, the dealer
added.
" To get to that, they needed to go and
reinvent their entire network structure
around the world, " the industry source
said.
In Canada, the plan included new dealerships
as well as the expansion of existing
stores under JLR's Arch concept,
which features the Jaguar and Land Rover
brands in dual showrooms under one rooftop.
Canadian
dealers " all bought in " based
on the expected boost in volumes, with the
typical retailer spending about $20 million
to build the new facilities that split floor
space evenly between Jaguar and Land
Rover, one dealer estimated.
Early growth went well. From 7,743
vehicle sales in Canada in 2014, JLR
recorded double-digit gains in each of
the following three years, according to
the Automotive News Research & Data
Center.
But after peaking at 14,545 vehicles in
Canada in 2018, sales slid. Totals for both
brands came in at 10,543 in 2021, 6,546 in
2022 and 8,503 in 2023.
Jaguar has been particularly hard hit,
topping out at 4,620 sales in Canada in 2017
before falling to 1,118 last year.
JLR abandoned its one-million-unit
growth plan under former CEO Thierry
Bollore in 2021, effectively replacing it
with the Reimagine strategy.
The plan will see Jaguar sales fall further
as the brand focuses on urban markets
such as Toronto, Montreal and
Vancouver.
CUTTING SALES VOLUME
According to the statement of claim
filed by Steele Auto Group in New
Brunswick, JLR told its dealers in August
2022 that the company plans to reduce the
volume of Jaguar vehicles in Canada to
700 under the Reimagine strategy from
8,000 under its initial growth plan.
Dealers are skeptical that JLR will
reach even those far lower volumes in the
ultraluxury segment, where it will compete
with the likes of Bentley and Aston
Martin.
Particularly in the wake of the significant
investments made under JLR's aborted
growth plan, retailers say they want
adequate compensation if they relinquish
their Jaguar franchises. Dealers and other
industry sources said the JLR Dealer
Council is in talks with the company, but
all members of the council and executive
committee who could be reached for comment
on June 10 declined to elaborate.
Dealers, meanwhile, are getting impatient
for a resolution to mediation that
began in earnest about six months ago.
One dealer said the two sides are close
to an agreement to enter the National
Automobile Dealer Arbitration Program
but are waiting on a commitment and
timeline from JLR Canada.
The dispute resolution process is
backed by the CADA as well as the Global
Automakers of Canada (GAC), of which
JLR Canada is a member. It's a common
avenue through which dealers and manufacturers
settle disputes without resorting
to the courts. GAC represents import
brands in Canada. -ANC
- Richard Truett of Automotive News contributed
to this report.
Steele group sues JLR
for closed Jaguar store
The suit, which seeks
$6.85 million in damages,
claims that JLR Canada
failed to disclose upcoming
changes to Jaguar's
business strategy as the
dealership was being built
By DAVID KENNEDY
TORONTO BUREAU CHIEF
STEELE AUTO GROUP SEEKS
millions of dollars in damages from JLR
Canada in an East Coast court case centred
on a newly built Jaguar dealership
in Dieppe, N.B., that shut its doors in
December, a little more than a year after
opening.
The Halifax dealership group with 55
franchised dealerships in the Maritimes
filed a statement of claim last fall in the
Court of King's Bench of New Brunswick,
alleging that JLR Canada breached its
disclosure obligations and made " negligent
representations " of what it was offering
Steele.
The group seeks $6.85 million in damages
from JLR Canada for " losses incurred
in acquiring, setting up and operating the
franchise, " the suit says.
The suit claims that JLR Canada failed
to disclose upcoming changes to Jaguar's
business strategy, including a plan to
transition from a dealership sales model
to an online sales model that would cut
dealer profit margins on vehicle sales and
reduce annual Jaguar volumes in Canada
to 700 vehicles from 8,000 under a new
plan focused on selling high-end electric
vehicles.
STEELE SAYS IT WAS 'DEPRIVED' OF INFO
In court documents filed in Moncton,
N.B., on Sept. 6 and updated Dec. 1, Steele
claims that the lack of disclosures extended
from initial discussions about a possible
dealership between the two parties in 2019
until after the store opened in August 2022.
" Steele was deprived of the opportunity
to make an informed decision based on
accurate material facts about whether or
not to enter into the franchise, " the dealership
group said in its filing, which relies on
the New Brunswick Franchises Act.
None of the claims have been proved in
court.
A spokesperson for Steele said on June 7
that the company was unable to comment.
On Sept. 26, JLR Canada filed notice of
its intent to defend itself in court, as well
as a " demand for particulars " calling on
Steele to clarify several of its initial claims.
JLR Canada would not comment on the
suit, nor discuss its relations with dealers.
" We will not comment on any retailer
issues or discussions with our retailers
regarding this transformation and we
remain focused on delivering a modern
luxury experience for our clients, " company
spokesperson Taylor Hoel said in an
email.
The Canadian arm of JLR, owned by
Tata Motors Ltd. of India, also faces dissent
from its wider dealer network in Canada as
it looks to reduce its store count but offers
what most dealers see as inadequate compensation,
according to Canadian dealers
and other industry sources who spoke to
Automotive News Canada on background.
'USUAL BUSINESS PRACTICE'
Steele, which also owns Steele JaguarLand
Rover in Halifax, began talks with
JLR Canada about a joint Jaguar-Land
Rover dealership in the Moncton area in
early 2019, according to court documents.
In May of the same year, JLR Canada
told Steele it would be granted a franchise
that would have an " area of responsibility "
covering 80 per cent of the New Brunswick
market, if the group built a dealership with
a " larger than typical showroom, " according
to Steele's statement of claim.
Despite the commitment, JLR Canada
told the dealership group it would not enter
into a franchise agreement before the start
of operations at the new store, as was " its
usual business practice, " the court documents
said.
Planning and construction for the
Jaguar and Land Rover store ran through
the summer of 2022, with the location opening
in August.
JLR Canada presented Steele a franchise
agreement Aug. 11, Steele claims, but the
disclosure document that would lay out
the franchise terms and the store's area of
responsibility was not included. The companies
exchanged communications about
the document through the remainder of
2022, but JLR Canada never provided it,
Steele claims.
In June 2023, the dealership group served
JLR Canada with notice to rescind the franchise
agreement, court documents say.
Steele ultimately closed the Jaguar portion
of the Moncton area dealership in
December 2023, though the Land Rover portion
continues to operate.
To date, no judgments have been made
in the case, according to New Brunswick
court records. -ANC
Steele Auto Group claims JLR Canada never provided the
disclosure document to lay out the franchise terms and the store's
area of responsibility, even after the joint Land Rover and Jaguar
store opened. In June 2023, Steele served JLR Canada with notice
to rescind the franchise agreement and closed the Jaguar side in
December. PHOTO: JEFF MELNYCHUK
Automotive News Canada - June 2024

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