One of Land Rover's longtime dealers is suing Jaguar Land Rover North America, claiming its assigned territory is so large it can't meet its factory sales objectives and earn quarterly bonus payouts worth tens of thousands of dollars.
The lawsuit comes at an unusual time for the smooth-sailing JLR.
Retailer beefs with manufacturers often go to court when a brand is facing rocky times. But Jaguar and Land Rover dealers are experiencing the highest sales both brands have seen since they were sold by Ford in 2008 and united by India's Tata Motors.
A dealer who meets JLR's business targets can receive payouts of up to 7 percent of the sticker price of all the vehicles the store sold in the previous quarter. The money is put in a bonus pool divided among dealers who meet their targets.
Land Rover Orlando, part of Fields Auto Group of Evanston, Ill., filed suit in Middle District Court in Orlando in July, claiming that the store's assigned sales and service area of responsibility covers too wide a swath of Florida.
The lawsuit claims dealers with smaller areas have an unfair advantage over Land Rover Orlando because they can more easily meet the requirements and claim the bonus payouts.
Though distance between stores is not the only criterion used to determine a dealer's area of responsibility, there are at least two other Land Rover dealers closer than Land Rover Orlando to some customers.
The store is on the northern fringes of Orlando but is responsible for sales and service in Palm Coast, a community 81 miles away, south of St. Augustine. Palm Coast is just 59 miles from a Land Rover store in Jacksonville.
Joe Eberhardt, Jaguar Land Rover North America CEO, would not discuss any aspect of the lawsuit. But he did say the company regularly reviews dealers' market areas at their request.
John Forehand, a Miami lawyer representing Land Rover Orlando, says the store asked JLR North America to revise its area of responsibility, but the factory made no changes.
The manufacturer offered to negotiate with the store to settle the matter before it filed suit, but the dealership rejected the offer, according to JLR North America spokesman Stuart Schorr.
The lawsuit finds the automaker at a robust moment. Both Jaguar and Land Rover have the largest and freshest lineups in their history, and more new products are on the way. Land Rover is setting U.S. sales records almost monthly, and Jaguar is seeing its highest sales in 13 years.
The increased sales are giving dealers a shot at sizable quarterly bonus payouts from the company's Business Builder Bonus program, according to the manufacturer. Dealers receive bonuses by hitting sales targets on new and used vehicles, reaching service volume goals, having an approved facility plan and keeping up with employee training needs.
The suit also claims that Jaguar Land Rover badgers dealers at the end of each month to self-register, or "punch," vehicles, an industry practice in which a dealer moves new vehicles into the dealership's service or rental fleet and later markets them as pre-owned.
Andy Vine, chairman of the Jaguar Land Rover Dealer Retailer Cabinet and dealer principal at Jaguar-Land Rover Louisville in Kentucky, said there is no pressure on dealers from JLR North America to punch vehicles.
Eberhardt would not address the suit's claim, but he said dealer participation in JLR's program is voluntary.