As the debate on the future of motor vehicle distribution continues
in Brussels today the Society of Motor Manufacturers and Traders (SMMT) offers
the following comments on four key issues:
1. The market must be regulated to protect consumers
Cars are complicated mechanical products requiring service
and support by technicians with specialist knowledge and equipment. It is therefore
unworkable to have an unregulated market in which anyone can sell and service
any make and model of vehicle they choose. Manufacturers and dealers spend billions
of pounds ensuring that franchised dealers across the EU can deliver high quality
service to customers on what is a safety-critical product.
If it were possible to deliver the same consistently high standards
through any other system, it would have emerged somewhere in the world. It hasn’t,
and that is why every major market is controlled by a set of rules (known in
Europe as Block Exemption) governing the supply and distribution of vehicles
to provide the highest degree of consumer protection.
2. A network of franchised dealers guarantees standards
and service levels
The Europe-wide network of manufacturer-backed dealers exists
to ensure that wherever consumers see the vehicle brand legitimately displayed,
they are guaranteed to receive the highest possible standards of service and
repair. In an unregulated market, where would consumers turn for the same level
of service, repair and a ready supply of spare parts? It could become a gamble
with consumers resorting to ‘telephone-directory-roulette’ to find a qualified
technician, in the absence of any franchised dealerships. One concept being
proposed to answer this issue is the creation of a new Europe-wide watchdog
body to regulate all service centres. Why create yet another Brussels-led body,
when the current system established over 100 years works to very high standards,
and has clear rules and governance.
3. The internet is an important part of the distribution
chain
The entire automotive retailing landscape has changed in the
last few years since the internet has become part of contemporary life. Customers
use digital technology to compare and contrast vehicles, specification, price,
delivery times etc. This new form of competition has been embraced by the industry
and it will continue to ensure that everyone is focused on delivering greater
value.
The challenge faced by regulators is to ensure that the open
nature of the internet is not abused by any unscrupulous operators who may deceive
customers with bogus offers and take credit card deposits, only to fold and
disappear for good. A rising number of customer complaints of this nature will
have to be addressed in the new set of regulations.
4. Distribution rules have no impact on car prices
There have been many claims that the current system of distribution
leads to the UK consumer paying higher prices for cars.
That is quite simply and categorically not true.
The distribution rules are Europe-wide, apply equally in every
country so, it is impossible for them to be apparently ‘bad’ for UK customers
and yet apparently ‘good’ for non-UK consumers. European Union law over-rides
national law and does not discriminate against specific nation states.
The reason for any variation in price across national boundaries
is quite clearly down to the well-known factors of currency and taxation. It
will only ever be addressed if Britain were to join the single currency and
have true tax harmonisation.
Those who claim the distribution system is the reason for any
price difference have either no grasp of European Law, or are being deliberately
mischievous.
