Do planners dream of electric cars?

Changes in the types of cars consumers are buying and their marketing are likely to have repercussions for Scotland’s commercial property market and land use and planning.

Figures released earlier this year by the Society of Motor Manufacturers and Traders showed that, while total UK car sales declined by over 5 per cent last year, sales in alternative fuelled vehicles (AFVs) – which includes hybrid, electric and hydrogen cars – grew by nearly 35 per cent. British motorists bought nearly 120,000 AFVs in 2017, representing 4.7% of the market share – a record high.

With the UK Government planning to ban sales of new diesel and petrol vehicles by 2040 while actively encouraging consumers to opt for AFVs through greater investment in intelligent transport infrastructure, car retailing will continue to change. This could have a significant impact on the huge out of town dealerships which are common across Scotland, as the sales model for AFVs is proving radically different.

The dealerships we see in peripheral locations on the outskirts of cities and towns across Scotland, such as Perth’s 'motor mile' or the showroom clusters at Seafield and Newbridge near Edinburgh, tend to occupy multiple acres of land, accommodating high numbers of vehicles as well as large service centres and workshop areas.

The new breed of AFV dealers are, on the other hand, following a new sales model which typically requires much smaller premises within established shopping areas. One of the world-leading electric car brands, Tesla, provides a prime example of this approach. Initially opening its first UK premises in London’s high end Westfield Shopping Centre, the company opted for a unit in the trendy fashion retail centre Multrees Walk when it opened for business in Edinburgh in 2015. With just a single car on display, the minimalist retail site includes digital screens where customers can look at specification details and optional extras on their preferred model which can then be directly ordered online from California. Whilst the ‘shop’ does have a back of house operation, it’s small in scale due to the fact that electric vehicles have far fewer moving parts than a traditional car and therefore tend to have far fewer servicing requirements.

Developments in Big Data, enabling motor retailers to target their consumers more accurately, are also changing and reducing staffing requirements. Within some areas of the AFV sector, audio visual and IT skills, enabling a salesperson to guide a customer through a 3D tour of a virtual car, are paramount to in-depth product knowledge.

The growth of omni-channel retailing and manufacturers using new and innovative means to reach consumers are both likely to alter the sector’s commercial property needs. Along with increasing use of city centre retail locations, we could also see car retailers increasing use temporary pop-up shops. Car dealerships may also consider entering partnerships with high traffic consumer areas such as supermarkets, where they could sublet non-food retail space to display and sell onsite.

While there is likely to be a longer term future for some of the larger out of town dealerships, especially in servicing and used car sales, many will need to innovate. Car dealerships may, for example, consider adding a high quality restaurant or shopping experience into the mix. They may also need to look at partnerships with other products and experience providers with shared brand values to appeal to their target market. The growth of AFV sales and the changing nature of vehicle retailing means that large out of town car showrooms will have to diversify to remain relevant in future.

Planning permission will be needed for much of this essential diversification but that may prove challenging. The planning system is notoriously slow to react to the changing needs of occupiers. This has left many high street shops empty across Scotland where planning permission has been refused for non-retail uses, despite the significant and well-publicised changes in the retail market.

In a bolder move, far-sighted landowners and planning authorities could use the threat to the long-term future of large car dealerships as an opportunity to plan positively for the future by re-allocating the sites for residential or mixed use development in future local development plans. There is an urgent need for new housing in and around our major towns and cities. With increasing pressure on housing developers to build on previously developed land, these sites could accommodate much of the sustainable and well-connected housing development we need over the next 10-20 years.