For decades, OEMs’ dealer network strategies were built around stability. Sstandalone franchised sites, long institutional leases and heavily branded showrooms reflected an era where manufacturers operated with relatively fixed networks and predictable retail economics.
Electrification, agency retail models, digital purchasing behaviour and rising operational costs are forcing dealers and OEMs to reassess how retail space is used, financed and future-proofed.
In a panel discussion at the recent Shoosmiths automotive conference, representatives with retail, property and OEM backgrounds explored the growing pressures reshaping dealerships’ property.
Despite years of predictions that digital retail would eventually replace physical dealerships, panellists agreed the showroom remains fundamental to automotive retailing, particularly as vehicles become more technologically complex and emotionally driven purchases.
AM caught up with him to discuss what this means for Stellantis brand dealerships. Click on the image to watch the video.
Richard Stephens, director at roadside propoerty specialist Robert Stephens & Co, says the industry has heard repeated warnings about the “death of the showroom” since the early days of internet retailing in the 1990s, yet consumer behaviour has consistently proved otherwise.
Indeed, research by JudgeService found 50% of customer enquiries now come from dealership visits, up from 44% in 2022, highlighting the continued importance of physical retail environments.
The increasing complexity around specifications, technology and powertrain options has actually strengthened the role of knowledgeable retail staff within dealerships.
David Hammersley, business and F&I manager at the National Franchised Dealers Association (NFDA), adds that dealerships are evolving into “a multi functional hub for all consumers, whether it’s sales or service or anything else that’s required.”
Multi-brand locations a necessity
That broader role is becoming even more important as electrification changes customer behaviour and increases the need for education around charging, battery ownership, finance and long-term running costs.
One of the clearest shifts emerging across automotive retail is the move towards multi-brand dealership environments.
For many dealer groups, the economics of maintaining large single-brand facilities are becoming increasingly difficult to justify, particularly as margins tighten and operational costs rise. Brands such as Ford, Vauxhall and Peugeot have seen their market share halved within two decades.
Nigel Wells, head of network development at AM100 dealer group Stellantis &You UK, says Stellantis’ expanding stable of brands has accelerated the need for more flexible showroom strategies.
“We are having to adapt to perhaps multi marque showrooms,” he says, “and are actively looking at multi marque opportunities all over the place.”
The strategy is already being reflected in Stellantis &You UK’s own property portfolio. In July 2024, the business opened a new six-brand showroom in Bristol following a multi-million-pound investment, creating one of the first dedicated Stellantis brand houses in the UK. The site at Cribbs Causeway replaced the group’s long-standing Peugeot operation on Lysander Road, which had traded since 2004, and brought together Abarth, Alfa Romeo, DS Automobiles, Fiat, Jeep and Peugeot.
For Wells, the challenge is no longer simply fitting additional brands into existing buildings, but doing so without diluting individual brand identities or compromising customer experience.
That balancing act is becoming increasingly important as dealer groups look to maximise revenue generation from existing sites while avoiding major redevelopment costs.
The shift also reflects broader changes in the competitive landscape. With more brands entering the UK market, including new Chinese entrants and EV-focused manufacturers, retailers are under growing pressure to use space more efficiently while maintaining profitability.
Hammersley also noted how aftersales operations are becoming increasingly critical to dealership economics as front-end vehicle margins continue to tighten.
“The profitability from aftersales, I think, is becoming the biggest earning potential in dealerships,” he says.
That changing revenue mix is likely to influence how future dealerships are configured, with workshops, servicing capacity and used car operations potentially becoming more commercially important than traditional new car display areas.
Pressure on lease structures
Alongside operational change, the discussion also highlighted pressure on traditional dealership lease arrangements. Catherine Hood, partner at law firm Shoosmiths, explained that automotive retail property occupies a unique position within the wider commercial property market because dealership sites combine elements of retail, industrial, workshop and office use within a single operation.
Historically, dealership leases often stretched to 15 years or more, frequently supported by institutional investment structures that prioritised long-term stability and predictable income streams. That model is now starting to change.
“You’re going to be very lucky if you have an occupier take more than a 10 year lease with a five year break,” Hood says.
The shift reflects growing uncertainty across automotive retail, where operators increasingly want flexibility to adapt networks, consolidate brands or reshape operations as market conditions evolve.
However, while wider retail property has embraced more flexible leasing structures such as turnover-based rents and shared fit-out contributions, automotive property has been slower to adapt.
Wells says flexibility is now essential because dealership sites may need to accommodate additional brands or operational changes during the lifespan of a lease agreement.
The challenge for dealers is balancing that need for flexibility against the significant capital investment often required by OEM corporate identity programmes and facility upgrades which demand commit substantial investment into sites despite having relatively short lease security remaining.
Electrification reshapes operations
Electrification is also accounted in property strategies. Wells described power supply capacity as one of the biggest immediate issues facing dealer networks as they install more, and faster, EV charging points.
“Supplier upgrades can be hundreds of thousands of pounds,” he says.
For many dealers, the issue is becoming a major factor in site viability and future investment planning.
Electrification is also driving dealers to consider how future aftersales revenue models may evolve. Wells acknowledged that reduced service profitability remains a growing concern as EV adoption accelerates. “We need each department to work harder to get more revenue,” he says.
Simply securing suitable dealership sites is becoming increasingly difficult. Hood says dealerships are now competing directly against industrial, residential and logistics developers for strategically located land.
“Actually finding space in the right location for the right price, before you even get to lease terms themselves, is a huge constraint,” she says.
That competition is intensifying as industrial property values continue to rise, particularly across London and the South East.
Stephens argues that dealership economics are increasingly challenged by rising build costs and changing land values. Industrial values in some regions now exceed automotive property values.
The result is growing pressure to reuse and reconfigure existing dealership sites more efficiently rather than relying on entirely new developments.
For dealerships, the message from the discussion was clear: future showroom investment will depend less on creating expensive statement buildings and more on operational flexibility, efficient use of space and the ability to generate sustainable long term returns.
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