Business rates hike adding to motor dealers' sales woes

Car showrooms are being boxed in by haemorrhaging sales and soaring business rates, with 10% of dealers disappearing from the roadside since 2010.

Motor dealerships across England and Wales will be stung by a £158.5 million hike in business rates over the next five years, according to ratings advisory Altus Group, exacerbating the pressure on the industry.

It comes as new car sales shifted into reverse at the start of the year, as the number of cars driven off the forecourt slid by 6.3% to 163,600 compared to the same month in 2017.

Robert Hayton, Altus Group's executive vice president of business rates, said dealerships must adapt to the changing face of the motor industry.

He said: "Dealerships need to rapidly respond to changes in motoring technology, car usage and ownership models, often impacting showroom presentation and format.

"Investment in improvements, often determined by manufacturers, can increase rateable values and therefore operational costs.

"Dealers should expect further increased liabilities if investing.

"All too often a too formulaic an approach fails to take account of the value drivers of modern operators or appreciate the complexity of rental agreements between manufacturers and operators leaving grounds for an appeal."

Analysis by Altus Group found that the number of registered car showrooms had dropped to 5,746 in April 2017, down from 6,320 for the same month seven years before.

It also revealed the scale of the business rate hike being parked at dealers' doorsteps, with the bill rising to £559.9 million in April last year, up from £496.9 million in 2010.

The amount demanded from car showrooms under the new rateable valuable regime averages out at £31.67 million in England and Wales over the next five years.

New car registrations ended 2017 5% down at 2.54 million, according to the Society of Motor Manufacturers and Traders (SMMT).

Retailers, hospitals, pubs and schools are also among those to be dealt a hammer blow last April when the first business rates revaluation for seven years left many facing crippling bill hikes.

Branded "absurd" and "not fit for purpose", the April 1 rates overhaul saw 1.9 million properties in England revalued and rates rise for 500,000 businesses.

Firms in London - retailers and pubs in particular - were some of the hardest hit due to soaring property values in the capital since the last time business rates were reviewed in 2010.