VALUATION OF…

Motor Dealerships

Franchise showrooms and workshops, valued on brand-standard compliance, bay configuration and dealer-network dynamics.

Methodology

Motor dealerships are typically valued on an income basis where let to an independent dealer group on a commercial lease, using the Income Capitalisation Method. Where the property is owner-occupied and no market rental evidence exists, Direct Comparison or the Cost Approach (Depreciated Replacement Cost) may be applied instead.

Applying the Big Five framework, the Income Generating Units are the showroom, workshop bays, parts store and open display yard, each of which commands a different rate and should be analysed separately rather than averaged across the whole GLA. Contract rental is compared to market rental for similar dealership premises, a vacancy allowance and normalised operating expenditure are applied, and the resulting income is capitalised at a rate reflecting the brand covenant, franchise agreement term and location on a recognised motor city or arterial route.

The size and configuration of the display yard is frequently the dominant value driver for a dealership, and a Direct Comparison cross-check on a rate per square metre of yard and showroom area, drawn from sales of comparable dealership premises, should be used to test the primary valuation.

Sources

Sources will be listed here as this section is written — each an external link or an uploaded document.