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.
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
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:
- 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.
- 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