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Out-of-centre movement grows as city prices rise

Dealers with showrooms in high-cost city centres are looking to off-load their sites to property developers and transfer the business to out-of-town retail parks. Manufacturers, who want to secure major freeholds in key markets, are trying to step in, but property developers are offering inflated prices for premium land as they look to exploit the continuing boom in the housing sector.

Alan Pulham, RMI franchised dealer director, says that overheads in city centres are too high for dealers to make sufficient returns because of the slim margins on new car sales. “There is little point in struggling to make a profit if you can sell the land to a property developer for a lot of money,” he says.

The recent growth in out-of-town retail parks featuring high street shops is proving attractive to dealers who no longer need to rely on prime locations to attract showroom traffic. Dealership consolidation and changes of ownership are likely to accelerate city centre closures as companies look to sell the least profitable parts of their businesses.

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