In its report 'The Future of Block Exemption and Motor Vehicle Retailing', Sussex-based Market Facts and Business Information (MFBI) believes the Block Exemption will survive in much reduced form after September 2002.
It says smaller dealers should be able to band together to form buying groups to take advantage of the discounts available to large dealer groups and big fleets, which will help to push down car prices.
The report rejects fears of a market 'free-for-all', saying: 'A new regulation should be adopted that no longer exempts manufacturer-exclusive distribution agreements, and that only a much reduced form of selective distribution should be exempted.'
The study wants manufacturers to retain the right to select retailers on quality basis, but have the power to restrict the type and number of retailers taken away from them.
MFBI also recommends that servicing should be separated from sales, allowing garages of a high enough standard to compete with branded dealers in a bid to increase value for money.