SMMT response to Trade and Industry Select Committee report

09 September 2004 #SMMT News

  • UK is ‘a good venue for automotive production’.


  • SMMT Industry Forum and Automotive Academy praised for work in improving competitiveness and addressing the skills shortage.


  • Industry welcomes call for consistent implementation of EU regulations and strict monitoring of EU-wide schemes for emissions trading.


  • SMMT disappointed by criticism of falling new car prices and action taken to open up the market for independent service and repair outlets.


SMMT chief executive Christopher Macgowan commented, ‘The fundamentals of this report are good news for the industry. While the sector is not without its problems, the Committee has recognised the steps taken to address issues of competitiveness and skills through organisations like SMMT Industry Forum and the new Automotive Academy.


‘By continuing to work closely with government we can ensure that threats identified in the report, such as the cost of regulation and low levels of investment in research and development, do not erode the UK’s significant automobile production and supply base.’


Although the report focuses on vehicle production, SMMT is disappointed by some of the conclusions relating to issues on the retail and servicing side of the industry.


New car prices

In the last five years new car prices have fallen by an average 9.2 per cent.1 The Committee concludes that further price reductions could be made if bulk purchases offered to large retailers were discounted in a similar way to those of fleet purchasers. However, this is already reflected in The Supply of New Cars Order 2000 which requires manufacturers to offer exactly these ‘equivalent discounts’ to bulk buyers.


Servicing and repair

SMMT rejects the claim that restrictive practices are used to prevent entry to the service and repair market. Over the last year the industry has moved decisively to open up the market for independent service and repair centres. In May 2004 the OFT gave manufacturers a clean bill of health after all car makers removed franchised dealer servicing as a condition of new car warranties.2


It is accepted that investment criteria for ‘authorised repairer’ status may vary across brands. However, while core criteria are used to guarantee minimum standards of safety and staff competence, it is not unreasonable for the investment made in premium brands to be reflected in additional customer service requirements.


Access to technical specifications

The comments of the Committee in relation to accessing technical information contradict those made by the trade body for motor vehicle repairers. In April, the MVRA praised manufacturers for access to technical data and claimed to be ‘delighted’ by improvements since the implementation of new block exemption rules.3 This demonstrates the sector’s commitment to improving the flow of information to those outside the traditional dealer network.


Notes to editors

1. In August the Alliance & Leicester announced the end of their five-year association with the new car price index, during which time prices fell on average by 9.2 per cent. The Alliance & Leicester noted that after five years, car prices are ‘broadly in line with mainland Europe’.


3. MVRA press statement issued on 21 April 2004 – MVRA says block exemption has greatly improved flow of technical info


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