PRESTIGE car-maker JLR has pulled out of plans to transition to an agency model for retailing with the news it will continue with the dealer franchise agreement with revised attention on customer relationships.

It said it had been working on adopting the agency – popularised by Mercedes-Benz and subsequently by brands including Honda, Volvo and Cupra – for more than two years.

JLR UK managing director Patrick McGillycuddy said in a statement that the surprise decision to move away from agency and focus on a refreshed franchised model was taken because of “internal and external challenges afoot, and the scale of change required to maintain a sustainable, profitable business.”  The change to an agency model would mean JLR would take full control of the car-buying process and give dealers (who then become agents) a fixed fee for each sale.

The agency model’s direct sales allows 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.

JLR said it had worked directly with its network and revealed the amended plans ahead of this month’s annual ‘Retailer of the Year’ conference and awards.

UK dealer group bosses from leading franchise holders Sytner Group, Hatfields and Vertu Motors were said to all support the move to commit to a reworked franchised dealer model.

Sytner chief executive Darren Edwards said in an interview with AM Online that: “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, i.e., 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.”

Hatfield managing director Gareth Williams said JLR took a positive approach to work with retailers before finalising its retail plan.

During those meetings, the retailers all agreed that the franchise model “provides a robust route for delivering those client outcomes considering the current sales climate”.

Mr Williams said: “The decision to prioritise the pursuit of an enhanced customer experience while retaining an established route to market is absolutely the right thing for our brands.”

Vertu Motors chief executive Robert Forrester said the decision to retain the franchise model was a decision made in consultation with JLR’s investor community.

Mr Forrester said: “It provides the stability to progress with delivering innovative services to our clients without distraction. On this basis, we welcome the news.”

Patrick McGillycuddy said: “We are proud of what we have achieved with our partners to deliver the perfect experience for our clients.

“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 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.”

JLR aims to be carbon net zero across its supply chain, products, and operations by 2039. Before the end of the decade its Range Rover, Discovery and Defender ranges will each have a BEV while Jaguar will be entirely electric.

But the move away from the agency model has brought some changes within JLR. 

The company said it is reviewing its network representation and Mr McGillycuddy said the UK retail network will be “rationalised to ensure we have the right partners in the right locations.”

JLR management recently told franchisee JCT600 that it would no longer be representing JLR from its Doncaster showroom, which it acquired from Pendragon in 2018.

JCT600 executive chairman John Tordoff told AM Online: “Naturally, we are extremely disappointed with JLR’s decision to close our business in Doncaster which, following our purchase in 2018, we have worked hard to turn into a successful operation.

“Doncaster is a thriving city and our other businesses in the area, Audi Doncaster, Mercedes-Benz of Doncaster and JCT600 Approved Used, all perform exceptionally well.”

JLR’s news follows Stellantis’ announcement at the end of last year that it would be delaying its agency model plans until at least 2026 to allow new group managing director Maria Grazia Davino to “rebuild the confidence and trust of its franchisees.”