Consumer complaints set to soar if block exemption is scrapped

18 July 2001 #SMMT News

Trading standards departments, Citizens Advice Bureau and

the courts should brace themselves for a deluge of complaints if the motor industry’s

block exemption is scrapped. That’s the industry view as new car buyers appear

to be increasingly disillusioned with buying through unregulated web sites or

through car supermarkets.

Block exemption is the set of rules that defines the way new

cars are distributed throughout Europe. Franchised dealers are well-trained

product specialists, that provide consumers with local centres for new car sales

and aftersales support. Prices are transparent, deposits are held safely, warranty

work is carried out with the minimum of inconvenience and consumers can have

absolute peace of mind in their purchase.

But a free-for-all market place, including sales from car supermarkets

and unregulated web retailers, threatens to create a pool of unhappy consumers.

SMMT is already concerned by a rising tide of complaints about companies that

currently operate outside the block exemption.

Four areas in particular should concern the government:


In the last few months several web retailers have collapsed.

Many customers, who had paid large deposits, found themselves without a car

and at the bottom of a long list of creditors.

Misleading prices

A report by independent new car price monitor, CarPriceCheck,

found that two thirds of manufacturers’ recommended retail prices were wrong

when used for price comparisons by web sites. Management fees were also often

excluded from the advertised prices. Media reports recently highlighted the

practice of under-valuing customers’ part exchange vehicles.

Not to UK specification

Many customers have found that some of the cars supplied via

the web or car supermarkets are not to UK specification. Standard warranties

often fail to match the comprehensive three-year guarantees offered by UK franchised

dealers, with a fee charged for a warranty upgrade.

Poor customer service

Aftersales care is a key feature of block exemption. Franchised

dealers must offer servicing and repair facilities – the so-called sales and

servicing link. But aftersales care seems not to be a priority for many car

supermarkets. Customers often report a complete lack of care after buying a

car, with many turning to the franchised network for assistance when things

go wrong.

SMMT chief executive Christopher Macgowan said, ‘Lost deposits,

inaccurate pricing and non-existent aftersales care, this is just a snapshot

of life without franchised dealers. So the question the government really has

to ask itself is, do we want more of the same? Because in a free-for-all market

place, with no block exemption, the biggest winner will be the legal system,

and the biggest loser the customer.’

Notes to editors:

  1. Block exemption is the legal framework that defines car

    distribution throughout Europe. Manufacturers supply new cars through franchised

    dealers which operate in exclusive territories. Dealers receive on-going training

    in technical support and customer care and block exemption requires every

    dealer to offer servicing and repair facilities. The motor industry’s block

    exemption will be reviewed in September 2002.
  2. CarPriceCheck has independently monitored new car transaction

    prices since August 2000. In a report published last month, they called for

    transparent car pricing among internet retailers, mirroring the agreement

    among UK manufacturers and their dealers that any price quoted must be an

    ‘on-the-road’ price.

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