2024 to see investor appetite for car dealership investments increase

Investor appetite for car dealership property is accelerating with transaction activity already ahead of 2023 and most of the car dealership stock marketed in 2023 now sold or under offer.

In its latest Automotive Market Commentary, property advisor Savills said that while overall car dealership investment property transaction volumes were down year on year by 58%, this was primarily due to a lack of stock on the market rather than the lack of appetite and was down only 33% on the 5 year average.

Purchasers of car dealership investments in 2023 were led by private buyers accounting for 50% of all acquisitions. Car dealers were the second largest purchaser accounting for 42% which is up from 25% in 2022.

Funds buyers lagged behind with 8% of bought investments, while dealers supported by ready finance from their manufacturer partners, accounted for 92% of all sales within the market.

Prime yields increased to 6.25% from 5.75% in December 2022, in line with the medium and long term average for all car dealership investments, suggesting market correction has overshot.

Bill Bexson, head of the Savills Automotive team, said: “Car dealerships are increasingly under the spotlight with investors who are attracted by the strong investment credentials and a resilient revenue profile.

“As a result, nearly all of the stock that was brought to the market in 2023 has been sold or is under offer and this is drawing more stock into the market at pricing well outside the medium and long term sector averages.

He said this presents savvy investors with good opportunities to capitalise on the robust fundamentals of the car dealership market as it transitions through the evolving changes in the provision of mobility services, such as EVs, and enhanced vehicle and customer connectivity.

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