Commission must act to protect consumer choice

11 March 2002 #SMMT News

  • 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


‘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.’


Note to Editors

Issues of concern for manufacturers in the draft legislation:

  1. 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.
  2. 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.
  3. 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.

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