JLR Canada, dealers turn to mediation to settle dispute over planned store cuts

JLR Canada and its dealers have agreed to mediation to settle an ongoing dispute over the automaker’s plan to reduce the number of Jaguar stores in the country. 

The two sides will enter the National Automobile Dealer Arbitration Program (NADAP) in the fall, a source familiar with the matter told Automotive News Canada July 25. The dispute resolution process is backed by the Canadian Automobile Dealers Association (CADA) as well as the Global Automakers of Canada (GAC), which represents import brands in Canada.

While the process is “typically not-binding,” the source, who requested anonymity, said the program is a common avenue through which dealers and manufacturers settle disputes without resorting to the courts. 

JLR declined comment, saying the company does not “comment publicly on confidential matters concerning our retail partners.” 

The move toward mediation heads off immediate legal action threatened by dealers, who were growing impatient with the pace of talks with JLR that began in earnest more than six months ago. 

PLAN TO REDUCE STORES

Dealers are balking at JLR’s plan to reduce the number of Jaguar stores, shift the brand to an agency retailing model and limit annual sales in Canada to 700 vehicles from 8,000 under a new electric-vehicle strategy, according to dealers and industry sources.

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. 

For the shift to upmarket EVs sold directly to consumers online, Jaguar is pushing dealers to relinquish their franchises by offering what the retailers see as inadequate compensation. According to a corporate memo from September 2022 obtained by Automotive News Canada, JLR Canada offered dealers the ability to “voluntarily return” their Jaguar franchise in exchange for greater Land Rover allocations and the five-year service agreement and the ability to sell certified used Jaguars.  

Of the 30 franchises that sold Jaguar and Land Rover vehicles coast to coast before the shift in corporate strategy, three Jaguar outlets have been relinquished. 

At least one dealer has taken individual legal action against JLR Canada related to the changes.  

In September, Steele Auto Group filed a $6.85-million lawsuit against the automaker in New Brunswick Provincial Court involving a Jaguar store that opened in the Moncton area in 2022, only to close about 16 months later. The Halifax group with 55 dealerships in the Maritimes alleges that JLR Canada misrepresented the franchise opportunity despite knowing the Jaguar business model was “going to change significantly and imminently” after the new location opened. The claims have not been proved in court.