Manufacturers demanding bigger, better showrooms as car giants jockey for roadside hotspots

Motor manufacturers are increasingly calling the shots after working alongside their dealer partners through the sharp end of the worst recession for years, according to roadside and automotive sector experts Anthony Keohane and Will Jolly from Colliers International.

With motor sales rising again and ever increasing numbers of new models rolling off production lines the main manufacturers are putting increasing pressure on dealers to come up with the goods when it comes to providing state of the art facilities to show off their ranges.

Anthony Keohane, who covers London and the South East for Colliers International, said sky-high land values in the region were pushing more and more manufacturers out into the surrounding counties.

He said: “The big issue for manufacturers around the capital is identifying affordable land. Multi-million pound prices per acre make it very difficult for dealerships to compete with the house builders who are trying to meet the demand for additional housing within the capital.

“Suitable development sites around the M25 simply do not exist. It frequently costs the same to buy the land in and around the capital as it does to build a state of the art showroom.

“But London is a big market and manufacturers cannot afford to abandon it. We feel the trend towards the ‘virtual’ showroom will continue to find traction in the capital while the more conventional showrooms regroup around the regional hubs.”

He predicted increased activity in the outlying centres such as Crawley, Watford, Reading, Thurrock, Brentford and Basildon.

His colleague Will Jolly – responsible for the South West – said recent trends suggested a move toward high profile regional hubs, with the main manufacturers strongly represented and related businesses such as car repairers, parts warehouses and trade counters following.

He said: “We believe there will inevitably be fewer but bigger dealerships. The requirements of the manufacturers are such that in order to justify the bigger and better facilities they have to be selling into a wider geographical area.”

He went on: “As the general economy has improved, motor manufacturers have sought to reinforce their brand standards. In particular Volkswagen Group and Jaguar/Land Rover are imposing new standards upon their dealers which will lead to requirements for extensions and, in many cases, relocations.

“As a consequence we have seen a higher level of property requirements than we experienced over the last five years and a number of relocations have and are being undertaken.”

Will Jolly said the principal centres in the South West were Swindon, Bristol/Cribbs Causeway and – increasingly – Exeter.

And he warned the trend towards bigger and better centres could impact on the role of smaller showrooms in the market towns and smaller centres of population.

He said this could impact on towns away from the main M5/M4 axis.

Will Jolly said manufacturers were still jockeying for best position on the roadside with the Matford Green hub currently the location of choice in the South West.

He went on: “The Matford Green and Marsh Barton motor dealership hub boasts the biggest concentration of facilities in Europe with more than 30 different manufacturers represented  within a 1.5 mile stretch.”

He said four or five manufacturers were still chasing the remaining plots in the South West motor hotspot.

Eleswhere in the region Cotswold BMW are relocating their Gloucestershire facilities to a flagship five acre site, providing in excess of 125,000 sq ft of operational accommodation.

Similarly, Inchcape have acquired a new site for the relocation of their Reading BMW/Mini dealership which extends to over 100,000 sq ft.

Will Jolly said: “In our opinion dealer activity for new premises is likely to continue to accelerate as the manufacturers continue to demand improved facilities from their dealer networks. Brands such as Skoda and Hyundai, who continue to grow their market share and who have historically traded from more secondary premises, are likely to require higher quality, larger customer facing facilities.

“Whilst there were virtually no transactions during the depths of the recession, the situation has now completely turned around, with enquiry levels in the first six months of 2014 up by around 150 per cent from this time last year.

“The level of enquiries is creating competition for dealership sites whereby most properties are now going to one or two rounds of best bids and this is starting to push values upwards.