Value of motor dealership premises

BenEadir

Hi all,

I'm looking for any public information on the average drop in value of dealership premises and showrooms since the burst of the Celtic Tiger.

Unfortunately many dealers (for whatever reason) ended up buying expensive plots of land on the edge of regional towns and spent a fortune building shiny new sales showrooms and service workshops in the years running up to the bust in 2008. Many of those premises had a book value (cost to buy the land and build out the premises) in excess of €2m.

I am working on a project which is trying to identify which business sectors suffered the greatest as a by product of the property crash so I am looking for any info which might help e.g. links to reports of a dealership which was built for €x and has now been sold for €y or valued at €y.

I believe motor dealers were hit at least as hard as if not more than any other sector in the economy. They were encouraged during the years 2004 to 2007 when car sale records were being broken year on year to invest in their businesses and scale for growth but having taken on debt to finance new premises they opened their doors just as the new car market collapsed and found themselves not only in a shrinking market but a market with an over supply of sellers (too many dealers most of whom had expanded their capacity) who had to cut margins to win business.

My gut instinct is that most dealerships built between 2005 and 2008 are now worth maybe 40% of their original value but I'd appreciate any info you can share with me to support or correct that assumption.

18MonthsaSlave

The quality of the dealership showrooms in my part of Germany is very poor compared to what the Dealers were forced to build in Ireland during the boom years. Many of the buildings are quite old and aren't the glass emporiums that were built around Dublin.

18MonthsaSlave

lot 30 in the upcoming allsops auction will be of interest to you. I think there might be another one for auction too but don't have time to look

18MonthsaSlave

Biggest value they have now is if a LIDL or ALDI can build on their redeveloped site.

ofcork

Couple on the outskirts of cork,one in blarney and pj o heas place in little island which cost big money and lying empty now.

BenEadir

18MonthsaSlave wrote: »

lot 30 in the upcoming allsops auction will be of interest to you. I think there might be another one for auction too but don't have time to look

Thanks 18Monthsaslave, you obviously live the life indicated by your username

BenEadir

ofcork wrote: »

Couple on the outskirts of cork,one in blarney and pj o heas place in little island which cost big money and lying empty now.

Thanks ofcork, I don't suppose you know the identity of the one in Blarney or what estate agents are marketing them? I'll have a look on Daft etc but just in case you know I'd appreciate it.

bigroad

Why were motor dealers forced to build these glass structures.Was Ireland seen as a cash cow for european manufactures.

BenEadir

bigroad wrote: »

Why were motor dealers forced to build these glass structures.Was Ireland seen as a cash cow for european manufactures.

I think it was a combination of:-

- manufacturers seeing an opportunity to push their resellers to invest in better premises to shift more product - no downside for the manufacturer.

- Record breaking car sales year after year gave dealers an overly positive view of the future.

- Easy access to bank finance.

- Greed - getting caught up in the whole property bubble and thinking that if they paid €3m to build a shiny glass temple they could pay a lot of it off out of ever increasing profits over the coming 10-15 years and then sell up and retire for a multiple of the €3m they had invested.

bigroad

Its madness really most of the structures that were built are really only designed for car sales or such.
I did hear that if the motor dealers didnt build the showroom to the car manufactures rules and regs ,their franchise would be questioned.

18MonthsaSlave

Dealers in my area don't have to make an effort as there are a number of large companies with company car schemes in the locality and are designated suppliers for the brand so they don't have to make an effort.

mickdw

BenEadir wrote: »

I think it was a combination of:-

- manufacturers seeing an opportunity to push their resellers to invest in better premises to shift more product - no downside for the manufacturer.

- Record breaking car sales year after year gave dealers an overly positive view of the future.

- Easy access to bank finance.

- Greed - getting caught up in the whole property bubble and thinking that if they paid €3m to build a shiny glass temple they could pay a lot of it off out of ever increasing profits over the coming 10-15 years and then sell up and retire for a multiple of the €3m they had invested.

I would be more of the opinion that it was 100 down to the manufacturers. The ultimatum was new facilities or no franchise.
The dealers were put under alot of financial pressure in order to keep their franchise. This was certainly the case for bmw, audi and vw.
Audi also seemingly insisting on dedicated buildings for each of vw and audi.

fmcg_scribe

mickdw wrote: »

I would be more of the opinion that it was 100 down to the manufacturers. The ultimatum was new facilities or no franchise.
The dealers were put under alot of financial pressure in order to keep their franchise. This was certainly the case for bmw, audi and vw.
Audi also seemingly insisting on dedicated buildings for each of vw and audi.

Yes, that was definitely the case for BMW dealers in Ireland after BMW Ireland took control of the distribution from Motor Import Ltd (Frank Keane) about 11 years ago.

Found this interesting article in the archives:
http://www.highbeam.com/doc/1P2-24696349.html

ofcork

BenEadir wrote: »

Thanks ofcork, I don't suppose you know the identity of the one in Blarney or what estate agents are marketing them? I'll have a look on Daft etc but just in case you know I'd appreciate it.

Found downing commercial have at least one unit there for sale now.

BenEadir

mickdw wrote: »

I would be more of the opinion that it was 100 down to the manufacturers. The ultimatum was new facilities or no franchise.
The dealers were put under alot of financial pressure in order to keep their franchise. This was certainly the case for bmw, audi and vw.
Audi also seemingly insisting on dedicated buildings for each of vw and audi.

I guess the manufacturers could have put a gun to the heads of each dealer and basically said "build a shiny new showroom or we won't renew your dealership" but even if they did the dealers should only have agreed to it if they ran the numbers and were confident of getting a financial return on the investment but when you factor in the human element (what dealer is going to voluntarily terminate his own business?) and the fact the other elements in the equation were so positive (easy access to finance, sky rocketing property prices, record breaking car sales etc) it's easy to see how so many, otherwise savvy business people, made such catastrophic decisions.

There but for the grace of God and all that........

ofcork

In the case of pj o hea in cork they had been in business in the city over 100 years,decide to move out build a big showroom with only the same franchise and recession done them.

BenEadir

ofcork wrote: »

Found downing commercial have at least one unit there for sale now.

Thnaks ofcork, appreciate it.

BTW, I searched for PJ O'Sheas car dealership in Little Island and nothing is turning up.

BenEadir

ofcork wrote: »

In the case of pj o hea in cork they had been in business in the city over 100 years,decide to move out build a big showroom with only the same franchise and recession done them.

Really very sad. It was like a perfect storm hitting so many otherwise fine family businesses i.e. a push from manufacturers to upgrade showrooms coinciding with a limitless supply of bank lending, rising property prices and inflated optimism that the good times were for everyone and would never end.

mickdw

BenEadir wrote: »

Really very sad. It was like a perfect storm hitting so many otherwise fine family businesses i.e. a push from manufacturers to upgrade showrooms coinciding with a limitless supply of bank lending, rising property prices and inflated optimism that the good times were for everyone and would never end.

Just to ad, there were dealers who got into property business cause they thought it was easy money. That accounted for the majority of the early closures.

BenEadir

mickdw wrote: »

Just to ad, there were dealers who got into property business cause they thought it was easy money. That accounted for the majority of the early closures.

I'm sure that is true. I know of accountants and lawyers who also got into the property game as they too thought it was easy money. They saw their clients (many of whom appeared to have less smarts than them) making tons of dough and thought they'd fill their boots also. It ruined a lot of otherwise good businesses.

goochy

wasnt pj o heas sold recently and then fairly feeble to let signs put up ? hard to see who would be in the market for it as car showrooms thought audi cork might have bought it but obviously not seeing as they are in bishopstown