The challenge for those who do need to undertake refurbishments is the difficulty in assembling a professional team and rising building costs along with land prices.
“Manufacturers will need to be mindful of the dual impact of such costs and cut their cloth accordingly or assist to relieve some of the property cost pressures on their dealer partners, said Bexson.
“There is a natural correlation between the rise in new car sales and rental growth, with rental growth for car dealerships running at 3-4% p.a. Manufacturers will have to take on board the property challenges many dealers face or run the risk of some of their partners finding the cost of meeting standards prohibitive.”
Consequently, he expects to see a growing trend for multi-franchise sites and more technological integration in dealerships, potentially reducing showroom space required.
Vehicle transportation costs
A more readily implementable way to control costs is by coordinating vehicle transportation to avoid empty outward or return journeys and to maximise the use of drivers.
Movex is a web-based system that compares prices and identifies empty slots on car transporters or return journeys for trade plate drivers.
One dealer group has saved as much as £40 per driven job and between £50-60 on a transported job, according to Movex, which has 3,967 dealers using its system. One of its clients estimated that it spent £15 million a year on transportation.
Chief executive Daren Jones said: “If a dealer undertakes 20 movements per week, savings would be around £600 per week, £2,400 per month and £28,800 a year. A multi-franchise group is more likely to save £10,000 per week, £40,000 per month and £480,000 per year.”
According to Jones, lead times can be as short as 30 minutes between a job being placed on the website and one of the 500+ registered transport companies spotting it and diverting a passing transporter.
“This creates a ‘win-win’ scenario – the dealer receives a faster turnaround and cost savings whilst the carrier benefits from a return job. It also has huge benefits for the environment,” he said.
Tax and insurance
The tax relief that can be claimed on fixed plant and machinery installed in properties changed in April 2014. This could see any allowances lost on a sale of a commercial property if the qualifying expenditure hasn’t been ‘pooled’, either by making a capital allowances claim or notifying HMRC of the ability of the buyer or any future owner to claim.