The UK government today made its first public comment on the
draft block exemption regulation proposed by Mario Monti, European competition
commissioner. The statement from the DTI acknowledged that a legal framework,
that is block exemption, is needed to protect consumers and that the motor industry
continues to work to deliver a modern and dynamic distribution system. The government
said that it would not oppose a delay in any measures to break up established
dealer networks.
Commenting on the UK government position Christopher Macgowan,
SMMT chief executive said, ‘The industry agrees that Mario Monti must tread
carefully in making any decision to dissolve established dealer networks. These
are key to ensuring high levels of consumer protection and any changes without
full discussion of the implications would be in no-one’s interest.
‘We remain concerned that the government continues to confuse
the issue of block exemption with price. UK car prices have fallen up to 30
per cent in the past four years and the British consumer continues to benefit
from healthy competition in the market place.
‘Many of the aspirations contained within the draft regulation
are already being delivered by the industry today with dealers offering more
than one brand at many sites across the UK.’
ENDS
Notes to Editors
- UK car prices have fallen consistently over the past two-and-a-half
years as shown by the most recent independent survey from the Alliance & Leicester
Car Price Index in May 2002. The cost of car ownership has fallen sharply
compared with incomes – dropping 30.2 per cent since the Car Price Index began
in June 1998. - The motor industry believes that there are still four main
issues which must be addressed:
- Location clause. 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. - After-sales service. 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.
- Multi-franchising. 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 maintained competition
between brands in the same showroom. - Price Harmonisation. The European Commission has indicated
that it wants to achieve greater price harmonisation across the single market.
This is currently undermined by significant variations in the taxes levied
on motor vehicles by EU states. These can in some circumstances add 200 per
cent to pre-tax prices.
