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Food retailers show an interest in dealer sites

Dealers looking to dispose of unwanted property this year should look outside the automotive retail sector.

The advice comes from Rapleys which has seen a resurgence of activity in supermarkets and petrol retailers wanting to take over dealership sites.Mike Pearce, Rapleys partner for motor trade and roadside, said: “In the short-term we’re seeing a lot of dealers coming forward with disposals and exit strategies for properties that they no longer need.

“Finding buyers is a challenge because it’s not a very active market. We’re seeing a heavy interest in dealer sites from food retailers like Morrisons, Aldi and Lidl, as well as a resurgence from petrol retailers. Dealers are likely to get the best value for their site by selling to food retailers.”

Market share body TNS shows Morrisons’ share of the UK food market grew from 11.5% to 11.9% between the last quarter of 2007 and the last quarter of 2008, priming it to look for more sites this year. Aldi also grew its share of the market from 2.7% to 3.2%.

Pearce said dealers were sitting on their hands and, that despite land prices dropping, the cost of construction isn’t following suit. 

He said: “At the moment there’s very little going on
at a transactional basis. 

“There will be a return of activity in the second half of the year which will see better financed dealers picking off smaller dealers. The market will be corporate driven, rather than property driven.”

Pearce said larger PLCs will be hampered by the stock market and the City’s current view against the motor industry.

Rapleys is also predicting that manufacturers’ involvement in property is likely to increase this year.

Pearce told AM: “I think they realise that they’re going to have to step in. We could see manufacturers buying dealers out, offering guarantees on leases and subsidised property deals.”

One of the more contentious points for 2009 is that new builds will focus on making back-of-house features such as the servicing departments much more customer facing.

Pearce said: “These profit centres are usually tucked away at the back of the business, but I think the aftersales departments will become much more a part of the front of house on new builds this year.”

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