Jaguar Land Rover wants to reduce its U.S. dealership count by about 20 percent within three years by consolidating the two brands into single locations.
"We want to cut the number of rooftops to about 200," said Andy Goss, CEO of Jaguar Land Rover North America. "At 200, the majority of dealerships would be Jaguar Land Rover."
The company, owned by India's Tata Motors, will not force dealers to buy or sell and is not offering financial incentives.
"We are encouraging dealers to sit down and have a solution," Goss said. "Nobody said so far that it isn't sensible."
There are about 97 stand-alone Jaguar or Land Rover dealerships in the country. Goss wants about half of them to merge. Altogether, there are 243 Jaguar or Land Rover dealerships.
"It makes perfect sense to house them in the same building," Goss said. "We step in, but that doesn't mean we mandate it."
He is focusing the consolidation on seven markets where both brands are strong: Chicago, San Francisco, Denver, Los Angeles, New Jersey, New York state and Portland, Ore.
"We sent out letters to the retailers in those territories," he said. "We want one business -- Jaguar Land Rover, not Jaguar and Land Rover."
Goss said he has traveled to all seven markets and met with targeted dealers. He is convinced that sales will grow at dealerships with both brands.
"We know the recipe for success, particularly in the luxury market, is to look at what BMW and Mercedes-Benz have done," he said.
BMW and Mercedes stores can offer buyers an assortment of passenger cars and SUVs under one roof, Goss said, while stand-alone Jaguar or Land Rover stores cannot.
"Forty-five percent of people who own a Jaguar also own an SUV," he said. "It is the same customer base. It would be foolish not to try and get those customers. "
The problem is that "everybody wants to buy everybody else, and no one wants to sell," Goss said. "This bodes well and shows both brands have a good future and the network knows that."
Goss said Prestige Jaguar Land Rover in Paramus, N.J., has become a model for the rest of the network. Prestige Auto Group, the nation's 39th largest dealership group in 2011 as ranked by Automotive News, has the largest Land Rover dealership. In March, Prestige acquired nearby Berger Jaguar and is building a 68,000-square-foot store for both brands in a former Mercedes-Benz showroom, also in Paramus.
Other deals are still being finalized.
"You will see on a regular basis, a whole cadence of agreements coming in," Goss said.
The new Prestige Jaguar Land Rover store, which is slated to open in September, has key elements of a new facilities standard for the combined brands, including a common entrance and Jaguar and Land Rover towers at the ends of the building.
The updated facility standards won't be completed until this fall and will be rolled out in the final quarter. "There will be more changes inside the dealerships," Goss said. "There won't be a generic interior for Land Rover and Jaguar."
Dealers will be required to comply with the new standards when their stores are renovated. But, Goss said, "we will not be hitting people over the head with this."