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'Leaseback' trend is set

Top retailer groups commission companies like Adonis Construction to build their flagship dealerships. But a new trend is emerging, says Adonis managing director Neville Clements.

As the campaign to harmonise new car prices across the EU has intensified, vehicle manufacturers have begun to fund the building of prestige dealerships, then to lease them to their retailers.

Some appear to be taking control of the process, to protect themselves against radical developments in the vehicle retail trade once the block exemption agreement expires.

The development of new super-dealerships, on sites of typically around 6000 sq m, and costing between £4m and £5m, is further preparation for the impact of the legislative changes.

Prestige dealerships – making bold statements in architectural terms, and containing features that would have been unimaginable five years ago – are being developed to offer the consumer a much better experience in a bid to retain their custom. The Honda dealership we developed in Chiswick is typical of the new breed.

Outboard motors, jet skis and lawn mowers are on display as well as the full range of cars and motorcycles. It has internet access for customers, and instead of the old 'brew machine', there is a Costa Coffee cafe on site. The first-floor gallery in the showroom is even accessed, not by a stairwell, but a glass-sided elevator.

We believe the massive cost of these sophisticated dealerships is the second major influence on the decision of some manufacturers to fund the design and construction process.

Dealers find the expense of such developments just isn't a viable proposition, so manufacturers are footing the bill then leasing the sites back at below market rates.

It is possible dealers will lose their exclusive territories, and sales operations could become divorced from servicing, leading to demand for new smaller sites. But such things will take some time to filter through, and there could yet be developments no-one has foreseen.

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