AM100 dealer Group 1 Automotive has reversed plans to terminate Jaguar Land Rover (JLR) franchise agreements in the UK, securing the continued operation of five dealerships it had planned to exit.
The business last year announced plans to divest its JLR franchise operations in the UK as part of a broad portfolio optimisation strategy revealed in its third-quarter results.
The US-based retail group said at the time that the decision was taken due to the persistent economic headwinds in the UK – including stubborn inflation, high interest rates, rising energy costs and weakening consumer demand – squeezing margins and driving up operating expenses across the retail sector.
Lithia UK went on to acquire three of Group 1’s JLR dealerships as part of its network expansion strategy. The deal, which completed in May, saw Group 1’s JLR dealerships in Derby, Chester and Preston transfer into its network.
Group 1 closed its Land Rover dealership in King’s Lynn the same month while Duckworth Motor Group acquired the Jaguar Land Rover Norwich franchise from Group 1 Automotive last June.
In its third-quarter results, the business now says it has reached an agreement with JLR to revoke its previous decision to terminate 10 franchise agreements.
As a result, Group 1 will retain and operate its five remaining UK JLR dealerships covered by its earlier termination plans.
UK network reshaped as margins improve
The JLR decision comes as Group 1 reshapes its wider UK portfolio, disposing of established franchises while adding Chinese brands.
During the quarter, it sold a Volkswagen dealership and an Audi dealership with combined annualised revenue of approximately $100 million. That took the annualised revenue associated with its UK dealership disposals this year to around $495m.
Group 1 has opened two of three planned Geely locations, with the third expected by December 2026. It has also agreed with Chery to open an Omoda and Jaecoo dealership in the UK, again expected by December.
The group has acquired and integrated three UK dealership operations this year, representing approximately $135m in expected annual revenue.
Daryl Kenningham, president and chief executive of Group 1 Automotive, said: “We have been deliberately reshaping our portfolio into larger, more profitable stores and seeing good progress selling stores that don’t fit our strategy. Proceeds from these sales will support our commitment to reduce our leverage.”
Its UK trading figures showed improving new car volumes and used car gross profit per vehicle during the third quarter.
New vehicle retail sales increased 1.9% to 15,984 units. On a like-for-like basis, excluding changes to the dealership portfolio, volumes rose 8.1% to 15,467.
Used vehicle retail gross profit per unit increased 15.7% to $1,437. The like-for-like measure rose 13.9% to $1,428.
Parts and service revenue fell 2.4% to $162.3m across the UK business, but increased 6.4% to $159.7m on a like-for-like basis.
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