- Proposed legislation must be changed to ensure Europe-wide
coverage of dealers accessible to all - Customers must buy with confidence, not be sold the model
offering the best commission to the dealer
The motor industry urges the European Commission to change
the draft block exemption regulation published today, in order that consumers
will continue to benefit from a competitive market.
If implemented, the draft regulation could result in a marketplace
where competition becomes stifled and consumers lose access to the full range
of products and services available from their current franchised dealer.
Christopher Macgowan, SMMT chief executive said, ‘The proposals
must be changed so that car buyers are guaranteed access to a high level of
service and repair, under the same roof, in a location convenient to their home.
The draft rules threaten the network of small, family run franchised dealers
that make up the backbone of sales and service outside of metropolitan cities.
There is nothing to stop them being driven out of business by powerful dealer
groups. The prospect of areas in the UK left without a franchised dealer is
very real with the resulting inconvenience and potential safety implications
for customers in those areas affected. In environmental terms, a recent survey*
in the UK showed that vehicles serviced by non-franchised dealers were nearly
twice as likely to fail an emissions test than those serviced by franchised
dealers.
‘The Commission must also address the issue of multi-franchising
within dealerships. The idea of a supermarket-style selection of brands under
one roof will only deliver value if each brand of vehicle attracts the same
commission to the sales team. If there is any difference, then human nature
will ensure that the consumer is directed towards the car delivering greatest
reward to the sales staff. This would be a backward step and remove the current
high level of competition between brands. A quick visit to any of the electrical
retailers selling white goods will make the case, as interbrand competition
is all but removed.’
ENDS
Note to Editors
Issues of concern for manufacturers in the draft legislation:
- The removal of any restriction on the location or number
of dealers in the distribution network will create disruption to the dealer
networks. Small and medium sized dealers are likely to be confronted by predatory
actions from larger and better-funded dealer groups. This is likely to lead
to the rapid consolidation of dealerships across the EU. - The introduction of the concept of an authorised repairer
presents difficulties for the manufacturer. The European Commission has accepted
that the service and maintenance of vehicles is important for safety and environmental
performance. Without some limit on the numbers and control of the location
of authorised repairers it will be very difficult for the manufacturers to
maintain quality and service across the network. - The European Commission is very keen to see the greater
take up of multi-franchising. Manufacturers accept that some greater flexibility
is required, but wish to retain the right to demand brand specific staff in
the multi-franchise environment. This would ensure that individual brands
were promoted professionally and competition maintained between brands in
the same showroom.
* The nation-wide SMMT Stop Fuming emissions programme backed
by the UK government ‘are you doing your bit?’ campaign showed that of the 4,000
cars tested in a one week sample, nearly 14 per cent of those serviced by non-franchised
dealers exceeded mandatory emission levels. Less than nine per cent serviced
at franchised dealers failed the test.
