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Recent Showroom Deals

LONDON BRISTOL EDINBURGH HUNTINGDON MANCHESTER

Motor Dealership Quarterly Update

The tail off in showroom demand we experienced over the last

quarter of 2010 has continued into the first quarter of 2011.

Corporate activity has been equally subdued. In 2010 the Marshall

Motor Group and Vertu grabbed the headlines with a string of

acquisitions, although since the turn of the year no major deals have

been announced.

The big issue on the horizon for dealers is the renewal of Block

Exemption Regulations for new vehicle sales contracts, which are

due to come into force in May 2013. Those manufacturers which are

introducing new dealer contracts are required to give two years

notice, so it is likely this will stimulate activity as the year rolls on.

Equally, there are several well positioned dealer groups with strong

manufacturer relationships and healthy balance sheets who are

ready to pounce for the right opportunities. Both premium brand

franchises and the larger “volume” brand franchises remain in

strong demand, particularly in the larger towns and cities which offer

significant trading opportunities.

From a property perspective the showroom market has been

predominantly driven by established players or by sponsored dealers

with manufacturer support. There are few new entrants into the

market and further consolidation on what remains a fragmented

market is most likely to occur. Recent data collected by Grant

Thornton reveals that the Top 10 dealer groups increased their

collective turnover by 4% in 2010, compared to the same period the

previous year. (This, despite the largest group, Pendragon, showing

a downfall of over 38% in turnover since 2008). It seems likely that

this trend will continue with the larger dealers securing a greater

market share at the expense of smaller independent operators.

Against this backdrop showroom property prices and rents remain

under pressure in what is a thin market. There are few signs of

upward movement in prices but, equally, we have not seen

significant further falls. On the contrary, we see an encouraging

resurgence and interest in showroom property from alternative

roadside occupiers predominantly in the retail and fast fit sectors.

Virtually all of the major supermarket groups have active acquisition

programmes for store concepts embracing convenient outlets

upwards to major foodstores. whilst companies such as Majestic

Wine, Topps Tiles, National Tyres, Halfords are all actively seeking

prominent well located showroom and roadside outlets across the

country for which ex dealership stock is often well suited.

2011 PROPERTY NEWS

NORTHAMPTON

Let to Progress Skoda Limited

Motor Trade & Roadside

EVESHAM

Acquired for Majestic Wine Warehouses Ltd

PRESTON

Investment sold to Lightstone Properties Plc

WIDNES

Sold to Trevalyn Estates Ltd

The message is that dealers wanting to exit from under performing

sites should therefore look further afield to find buyers.

In terms of inward property investment the cost of entry for dealers

representing premium brands remains as high as ever.

Manufacturers chose not to push dealer standards in the teeth of the

recession, although this appears no longer to be the case in the run

up to 2013. In the main, property facility requirements for premium

brands are moving towards ever larger bespoke facilities.

At the other end of the spectrum multi franchising on a single site for

“value” brands is becoming more accepted. Manufacturers

representing these brands (and those brands with limited UK market

share) are seeking dealer partners who can provide them with a cost

effective means of representation in key markets, which would

otherwise not occur. Equally, dealers looking to maximise return

from their property assets can no longer afford to represent these

brands in standalone showrooms so the benefit of multi franchising

works both ways for manufacturer and dealer alike. As a

consequence, properties with the flexibility to represent a number of

brands under one roof and yet share back office, parts, workshop

and administrative space should become more attractive for

continued automotive use beyond 2013.

For further information and advice on emerging trends and how they might impact upon your showroom

property, please contact our specialist Motor Trade & Roadside Team on 0870 777 6292 or directly, as

below:

0870 777 6292 www.rapleys.co.uk

The comments in this newsletter are for information purposes only. Professional advice should be sought prior to taking any action

and Rapleys LLP will not accept responsibility for decisions taken solely on the basis of information contained in this newsletter.

LONDON BRISTOL EDINBURGH HUNTINGDON MANCHESTER

Mike Pearce

Alisdair James

Paul Mather

Mark Frostick

mjp@rapleys.co.uk

abj@rapleys.co.uk

pm@rapleys.co.uk

maf@rapleys.co.uk

07836 229712

07980 871070

07810 885498

07785 522958

Recent Showroom Deals

WINDSOR

Let to Uniquemade Ltd

NORTHWICH

Sold to P&L Property Management

(Trading as Onsite Services Ltd)