Roadside & Automotive

There is increasing appetite amongst investors, particularly from specialist funds, pension funds, and long income funds for well-located, income-producing assets.

Key Takeaways

1. 2024 could see more platform purchases than 2023 as owners assess their portfolio strategies amid the growing adoption of electric vehicles. Operator mergers are also likely to continue as operational value in the sector remains strong.
2. Transaction demand will remain for core assets. The adoption of a dual fuel strategy for sites will encourage existing tenants and facilitate new market entrants.
3. Car dealerships will continue to be adversely impacted by agency dealerships; a model set to cause further disruption in 2024.
4. The UK Government extended the date for the cease of all petrol and diesel new vehicle sales from 2030 to 2035. The coming year will bring additional scrutiny on regulatory decisions that impact the sector.

The Roadside sector in a changing environment

A market set for change

2024 is expected to bring acquisition opportunities for core single site and portfolio assets. Petrol Filling Station assets saw high profile mergers in the last year but heading into 2024, the sub-sector remains disaggregated with multiple operators in effect. 

Car dealerships will also see a change in 2024, with a shift towards agencies set to uproot the long-established franchised dealer market. As car manufacturers opt to work with few dealer partners, the expectation is tenures will move from lease to ownership.  

Electric vehicle disruption 

2024 will see portfolio consolidation as owners assess upholding or disposing of Petrol Filling Stations. It remains to be seen the strategy owners take, but the inflow of institutions to the sector indicates investors are in the process of identifying the right strategies for their portfolios. 

Operators are increasingly aware of the need to implement a dual fuel strategy on their sites. 2024 will continue to see the adoption of electric vehicle charging. Car showrooms have also seen an influx of new market entrants. The number of alternative-fuelled cars on the road will hit one million in 2024, with the uptake of electric vehicles set to continue.

Figure 31: Number of electric vehicles in the UK

Source: SMMT, August 2023

What trend will pose a challenge in 2024? 

Demand for electric vehicles has risen sharply in the last four years. The percentage of new car sales that are electric vehicles has reached 23%, rising from just 3% in 2019. 2024 will likely see the UK surpass one million electric vehicles on the road. Roadside & Automotive operators will need to adapt their sites to be suitable for electric vehicles. 

While the widescale adoption of electric vehicles may seem a far distant challenge, the reality is adapting portfolios to facilitate electric vehicles is a necessary solution to what is a long-term challenge to the sector. Operators can gain competitive advantage by adapting their portfolios early.  

The UK Government’s decision to delay the ban on all petrol and diesel new vehicle sales to 2035 provides additional time for asset owners to modify their sites. However, given the UK’s commitment to net zero targets, some car manufacturers are committing to delivering all-electric vehicle fleets by 2023 regardless of regulatory uncertainty.