Motor retail sees 44% fall in new dealership planning applications

The rate of consolidation in the motor retail sector continues to slow according to consultancy APC.

It said that those fewer dealerships are being built and the growth of brands like Kia, MG, Volvo, Cazoo, Tesla, CarShop, and Motorpoint were taking up any slack in the market.

“There are less new dealerships being built as evidenced by the 44% decline in planning applications for car dealership activities between 2016-2020.

“This reaction is reflective of the wider industry’s structural and geo-political background; and rising land and construction cost, balanced by the ability for the “digital dealership” to provide the growth conduit,” it added.

“We have noticed a decline in OEMs new site search activity as they manage network consolidation and market area adjustments. This suggests that the car dealership property stock is starting to stabilise around current numbers and highlights the attractions to dealers of holding property to secure the best car franchising opportunities.

APC cited NFDA numbers which shoch show the decline in the number of dealerships since 2010 has been 13.2%, the previous 10 years 19.5%, and the 10 years before that 21.8%. It said that based on its own database of 4,345 dealerships just 2% were currently available.

Key trends

• Digital adoption has advanced 12 years in 12 months due to Covid
• Less showroom space will probably be required and will be configured to provide an improved and inspiring customer experience
• Multi-franchising of sites will increase
• The dealership remains key to the sales process and is valued highly as a means of demonstrating the increasing technology in vehicles and educating consumers on EVs
• The introduction of EVs is beginning to impact on how dealership sites are used
• Only modest dealership rationalisation through to 2025 is anticipated, with a decline in numbers of between 6 and 15%

Check out the full report here