Smaller Motor Dealerships Quitting the Trade
Small Retailers Still Strugglling
The recession continues to claim victims in the motor trade with many small dealerships quitting the retail sector.
According to property experts, small car dealerships are struggling to cope as banks and lenders tighten their belt and become more prudent in lending.
For many small motor retailers, problems arise when the terms of their commercial borrowing are changed following a review period with many lenders downgrading the value of a retailers’ property. This presents problems for those retailers who have borrowed against the value of their property when the market was in better health.
Property specialists GVA say they have noticed a continuing trend of small dealerships leaving the motor trade business.
“We have handled a number of insolvency disposals over the last 12 months, mostly of small groups who may have been struggling for profitability during the recession, said Tom Poynton of GVA.
He also pointed out that writing down the value of properties can be the first step in the road to administration for many dealers.
“The write down in asset value can trigger covenant breaches and the ability of banks to pursue recovery through an administration process.”
Colliers’ head of automotive and roadside David Chittenden has said they are noticing many more properties coming on the market as a result of dealers shutting up shop.
“Vacant properties are still coming to the market and we are seeing 50% of these going out of industry or deals which are short term leases, pending relocations,” he said.
“We are certainly aware of more receiverships but these are generally finding a home.
“We think there are less retirement disposals because of values. The ones we have advised on have decided not to sell and are trying and work through it if they have the support of the manufacturer and no investment is required.”