The automotive retail sector is expected to bounce back to pre-pandemic levels once the COVID-19 crisis has ended, with an initial surge due to pent up demand, according to the latest Automotive Viewpoint published by Colliers.
Sales in greener vehicles grew during 2020, despite the enforced closure of car showrooms during the first national lockdown, with more than 465,000 Ultra Low Emission Vehicles being registered - a rise of 88 per cent from 2019’s figures. Almost 120,000 mild hybrid electric vehicles were sold in 2020 (an increase of 184 per cent on the previous year’s numbers) which was almost matched with 108,000 units of battery electric vehicles (an increase of 186 per cent).
“For those who have managed to keep working during the pandemic there have been opportunities to save,” said John Roberts, Head of Automotive & Roadside at Colliers. “There’s been little chance to go out and spend socialising, particularly in recent months, and many are saving on reduced commuting costs.
“The costs of electric vehicles have often been prohibitive but with more and more manufacturers producing these vehicles and with incentives from government for charging infrastructure, the pricing is becoming more obtainable.”
As the import and export of vehicles and parts between the UK and the EU is worth €70 billion (£63.5 billion) the last minute trade deal obtained on Christmas Eve proved to be a relief.
Dr Walter Boettcher, Head of Research and Economics at Colliers added: “Exit from the EU customs union has arrived and it is not without its problems, but judging by published remarks from the SMMT, there appears to be optimism that many of the residual and transitional problems such as VAT and second-hand car sales to the Republic of Ireland may be worked out. The real question is whether the EU are willing to remain focused on ironing out the trade deal wrinkles, given competing priorities with coronavirus and economic recovery.”
During 2020 dealerships and showrooms continued to attract investments from high net worth individuals, overseas investors and property companies - yields stayed in line with average commercial property, but offering an additional 30bps. Also Ark Data Centre’s purchase of a Renault showroom highlighted how these assets can be favourable to alternative uses.
“Last year the sector improved its omni-channel approach and many in the industry are now offering click and collect or deliver to your home services. While this year there may be a reduction in some dealerships due to natural wastage, there will not be large scale distress in the sector, it remains a good place to invest in.” John added.