9:03 am, May 10, 2023
JLR’s cull of Jaguar dealerships has begun as listed car dealer group Vertu Motors revealed today it will be slashing its Jaguar outlets from six to just one.
Vertu Motors booked a £1.5m impairment charge relating to the ‘terminated Jaguar operations’ in its latest accounts, it revealed this morning in a Stock Market update.
From November, Vertu Motors said only its Leeds dealership will represent both Jaguar and Land Rover – its remaining five sites will lose the Jaguar brand completely.
Vertu said the move comes as part of JLR’s ‘Reimagine’ strategy – which will see the car maker focus on what it calls a ‘House of Brands’ that incorporates Range Rover, Defender, Discovery and Jaguar as separate entities.
Vertu said: ‘Jaguar Land Rover have announced their Reimagine strategy, which creates a House of Brands. Jaguar will be a luxury electric vehicle brand with reduced points of sale reflecting its repositioning.
‘The group currently operates six Jaguar outlets, alongside the Land Rover brand. From November 2024, only the group’s outlet in Leeds will continue to represent both Jaguar and Land Rover brands.
‘Intangible assets relating to the terminated Jaguar operations of £1.5m have been written off as a non-underlying, non-cash impairment charge in the year.’
The impairment charge revealed by Vertu is likely to be the first of many as Jaguar Land Rover dealership operators across the country assess the impact of the manufacturer’s plans.
In March, Car Dealer exclusively revealed news that JLR was set to drastically slash its Jaguar network from more than 80 dealers to just 20 in less than two years.
At an investor meeting, JLR told its partners it would be drastically reducing the size of its dealer network as part of its ‘Reimagine’ strategy and made attendees sign NDAs. The news was leaked to Car Dealer and corroborated by several partners at the event.
Experts at the time said car dealer groups would be forced to book multi million pound impairment charges after investing millions into Dual Arch Jaguar Land Rover dealership concepts and the Vertu announcement proves they were right.
David Kendrick, CEO of accountancy firm UHY Hacker Young, said this will be the ‘first of many’ similar impairment charges.
‘It was a sensible thing for Vertu to do as these changes are coming,’ he told Car Dealer.
‘I don’t see how you cannot book a charge like this when the new JLR concept drastically alters the business model for these dealerships. The long term investment opportunity and viability is now very different.’
Mike Jones, car industry analyst, told Car Dealer that the Vertu impairment charge was stark evidence of the impact the JLR network changes will have on dealer groups.
He said: ‘We see in the Vertu results announcement the practical implications of Jaguar’s future franchising strategy.
‘Retailers outside the major metropolitan centres will have showrooms to fill, both from a physical and a profit contribution point of view.
‘While Land Rover has produced the vast majority of profit to pay for the Arch Concept investments, retailers now have a decision on whether to rely on the Range Rover House of Brands to deliver this additional profitability, or to dual franchise the site.’
Inside a JLR Dual Arch dealership
Vertu has invested tens of millions of pounds on Jaguar Land Rover Dual Arch dealerships.
In November 2020, the dealer group said the last step of its investment in Dual Arch sites had been completed after spending £3.6m on the renovation of its Jaguar Land Rover site in Nelson.
The rebuild took 12 months and saw the dealer group demolish the old showroom to build a new one.
One dealer source told Car Dealer: ‘When the Arch franchise concept came out there was a simple ultimatum from Jaguar Land Rover – either you invest in these new sites or they’d find someone else who would.
‘The fact we’re now being told a few years later that Jaguar is not part of the plans and we’ll lose that brand is unbelievable.’
In April, JLR revealed details of its Reimagine strategy. In it, the Land Rover name was sidelined as part of its ‘House of Brands’ strategy.
It also changed its corporate name from Jaguar Land Rover to simply JLR.
In a statement to Car Dealer at the time news broke of the rumoured changes to the Jaguar network, the firm said it was looking to ‘establish a new benchmark’ for the luxury sector.
JLR has now issued a fresh statement to Car Dealer, which adds: ‘We are making good progress delivering Reimagine, our strategy to realise a sustainability-driven vision of modern luxury.
‘As part of the transformation, the retail network will be reconfigured establishing new benchmark standards in customer service, quality and efficiency for the luxury sector by rightsizing, repurposing and reorganising.’
First published: May 10, 09:03; Updated with new JLR comment: May 11, 07:03
