"You can't get a good enough return for using prime real estate to sell used cars. We were getting a four per cent return when a savings account was giving eight [per cent]."
A move off a main street shouldn't affect business too much, said Wall, as customers were already moving online.
He predicted he'd soon be operating out of a showroom in a less expensive area, with a warehouse for car storage and a heavy focus on internet customers. Already, just 10 per cent of his customers walk in off the street; the rest come from online.
Graham Blyth owns Cars 4 Less, also on Great North Rd in Grey Lynn, and has been in the car sales business for 35 years. Six months ago, his yard was on the corner of Dominion and View Rds in Eden Terrace, until increasing rent drove him out.
"The industry has changed a lot in my time. Fifty years ago, you could still see car yards on Queen St but that has all changed.
"The land many car yards are on is too expensive to sell cars off and location isn't what it used to be."
On the other end of the scale but on the same street are big players such as Giltrap Prestige. Council valuations show building improvements on the land worth $14 million.
Richard Giltrap said the company had a high profile to keep, but he acknowledged it was unsustainable for the smaller dealers.
"The big players, the top 10 brands, can probably support it but after that it gets pretty marginal on the viability side."
He said big dealers helped offset the high rents through offering other services such as finance, parts and servicing.
In Sydney, multi-level showrooms worth A$50m ($63m) are being built, and they feature café-bars and designer lounges to entice high-end buyers.
Giltrap predicted the future for smaller businesses was lower-cost warehousing and an increased online presence.
He said bigger players would stay in prime locations to drive brand and reputation.
Grant Simpson, principal dealer of the Andrew Simms dealership in Newmarket, said high rents in high-profile locations were forcing dealers to make better use of the sites. Meanwhile, Clive Matthew-Wilson, founder of the car buyer Dog and Lemon Guide, warned dealers moving online also raised risks.
"[There is a] disturbing trend for licensed dealers to start dealing cars from their own homes ... they simply put their cars on Trade Me and pretend to be private sellers.
"This is bad because dealers often neglect to give the buyers their legal right to warranty."
Motor Industry Association president Perry Kerr said the days of dozens of car yards down a strip were long gone.
"There will always be a car yard but in what form I don't know. You can do a lot on the internet," he said.
"But people will still want to kick the tyres," he says.
Let us know
Consumer Watchdog wants to hear what you have to say. Are you upset about customer service? Has a company given you a raw deal? Are you unsure about consumer rights? We want to know. Contact consumer affairs reporter Alice Neville on (09) 373-9365 or alice.neville@hos.co.nz.
