Dealership property values have peaked with the higher numbers of dealerships on the market.
That’s the view of Daniel Cook, partner in the Automotive & Roadside team at Rapleys, who said the market may have topped out.
“Looking at the UK market right now, there are signs that dealership values may have peaked. Fundamentally, there is an increasing quantity of dealership property on the market, largely driven by the volume franchises who are looking to streamline their portfolios.
“We anticipate further consolidation over the next 12 months, which will in turn further increase available stock on the market and likely impact values,” he said.
Cook said the market was seeing a slowdown in values not a freefall.
“While values may no longer be accelerating, the slowdown is likely to be limited. Demand for sites overall remains strong, including from alternative uses such as residential, which continues to exert real pressure on commercial operators across the board as landowners and investors seek to maximise values.
“One of the main drivers in market activity over the last two to three years has been JLR’s strategy of moving both brands under a single, large facility. This consolidation is only one example of innovation into how real estate portfolios are more efficiently managed, both from the franchise and manufacturer perspective.
“One of the emergent markets in the last five years has been stand-alone used car sites and supermarkets. The majority of main dealer groups now have these facilities and many are looking to expand this market further than the franchised sector as margins have been much stronger. We see this continuing for the foreseeable future.”
Cook believes that well-funded dealer groups with strong balance sheets will continue to acquire smaller groups.
“In addition, while new car sales have slowed, the used car market will continue to be strong and demand for sites from used car operators for new facilities will continue.”