Dealers in Europe claim their margins are being eroded and are threatening legal action
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by Chris Chilton
March 7, 2023 at 09:34
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by Chris Chilton
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Luxury brand dealerships invest huge sums in their showrooms to help create the right environment to separate customers from their money. And they do it because they know the generous margins in the cars they sell will justify that investment. But Jaguar and Land rover dealers in Europe claim the automaker is messing with that balance and are threatening to take the company to court.
Automobilwoche reports that Jaguar Land Rover has terminated contracts with its European dealers and has offered new terms that dealers say will leave them much worse off. In Germany, for instance, dealer margins will be cut in half to 9 percent, the report says.
That kick in the nuts would be hard to take at the best of times, but compounding the agony is the fact that the dealers are selling far fewer cars than they would like. Although JLR experienced a mini resurgence in the tail end of 2022, its most recent full-year numbers are still down on those from before the Covid pandemic decimated the supply of semiconductors. It began this year boasting of a healthy order book, but the company is struggling to get hold of enough chips to fulfil those orders, which is believed to be one of the main reasons why former CEO Thierry Bolloré was forced out last November.
In a letter to JLR seen by Automobilwoche, the head of the brand’s European dealer association, Arjen de Jong, complained that the automaker’s new volume forecasts were significantly lower than before and came with worse margins for dealers. De Jong threatened legal action, warning JLR that if it insists on going through with its plan to introduce the new contracts this spring the result could be a court battle that has the potential to harm both sides.
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