IN a move that will please brokers, Jaguar Land Rover has shelved its plans to go agency which were originally planned for the start of 2025.
JLR will now stick with the franchised model but has promised to look again at agency in 2027, according to UK Managing Director Patrick McGillycuddy.
Speaking after the announcement that JLR has abandoned its plans for direct sales, McGillycuddy said: “We’ve been working with our retailer partners around our agency implementation and that was fundamentally rooted in our Reimagine strategy.”
Reimagine is JLR’s plan to become a “modern luxury” brand that’s “sustainability-rich”. [Yes, we’re none the wiser, either.]
Reimagine is JLR’s electrification plan using the Jaguar, Defender, Discovery and Range Rover brands while dropping Land Rover.
However, McGillycuddy now thinks implementing agency on the network at the current time will cause too much disruption to both the retailers and customers – which JLR now calls ‘clients’.
“When we look at the client outcomes we wanted to deliver – at the point of when we did the strategy – agency was the best vehicle to, excuse the pun, deliver those client outcomes in terms of consistent model luxury experience, consistent in-store and online experiences, stock fluidity and around price comfort. And really when you look at all the research, clients are very much in favour of all the principles of what agency can deliver.
“Clearly we've been observing the broader market and understanding our own transformation journey and when you look at the broader market, things are different.”
McGillycuddy listed a host of factors that impacted his decision to drop agency for now including the economy, JLR’s parts supply chain disruption and the disruption of the implementation on both retailers and customers, but stopped short of adding the stocking cost that would be assumed by the manufacturer.
“When you then look at the amount of change that we are already planning to implement, the amount of change we’d have to drive into our network, that would create disruptions for our clients. So actually at this point in time, it wouldn’t be in the interest of our clients.”
He now believes most of the aims of the original agency plan can be achieved through the franchised model with new agreements set to be implemented before the end of 2024.
National fixed pricing scheme
However, McGillycuddy did admit that one area of compromise would be a national fixed pricing scheme that only agency could deliver: “It is fundamentally still a franchise agreement, but we’ve agreed new ways of working within that framework. We have to respect what a franchise agreement can achieve.
“What we are trying to achieve with our new ‘go to market’ approach with our partners is a greater consistency, a greater transparency. So this is having the right systems and platforms that allow it as well.”
However, he didn’t rule out agency in future, adding: “We've committed to review it again in 2027.”
In terms of timings and the roll-out of the new plan, McGillycuddy said:
“We’ve got a plan to implement the new agreement over the balance of this year, and then some of the deliverables, some will happen this year, some will happen into next year as well. So there is no cliff edge in terms of implementation.”
While the agency plans have been dropped for now, JLR is sticking to its plans to reshuffle the network and, in particular, cull the number of Jaguar sites.
JLR will again rework the margin structure under the new ‘refined franchise’ plan. In late 2022, JLR caused dissent among retailers by cutting the margin on new cars. At the time, retailers claimed this was to cover the costs of a move to agency – something McGillycuddy denies was the case.
The margin structure will further focus on customer experience and will not include a “volume metric”, he added.
Broker News Newsletter 30 April 2024
Catch up on the latest leasing broker news in the 30 April 2024 Broker News newsletter
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Tristan Young is an award winning journalist with more than 25 years’ experience reporting on the automotive industry focussing predominantly on fleet and retail. As a self-confessed petrol-head, Tristan has a weakness for car classifieds. When he’s not writing about the automotive industry, he can usually be found outdoors with a small pack of border collies.
