New European Commission figures that show 'substantial' price disparities on the pre-tax price of new cars across Europe threaten the future of the car distribution block exemption.
EC competition commissioner Mario Monti has warned that the failure of car manufacturers to establish closer pre-tax prices on an international basis risks jeopardising the selective and exclusive car distribution system.
His department is reviewing the block exemption that expires in September 2002, and is due to propose its plans for any future exemption before the end of this year.
'Manufacturers' behaviour will be fully taken into account later this year when I will present proposals for the future legal framework for motor vehicle distribution to the Commission, in early advance of the expiry of the current block exemption regulation in 2002,' said Monti.
He confirmed that monitoring new car price differentials and possible obstacles to parallel trade in new cars 'remained a high priority' for the Commission, and described current pre-tax price differentials within the European Union as 'substantial'.
According to the EC: 'Despite the recent depreciation of Sterling against the Euro, prices in the United Kingdom are still much higher than in the Euro zone. Greece, which joined the Euro zone in January, as well as Finland, Spain, the Netherlands and Denmark, a non-member of the Euro zone, are the markets where car prices before tax are generally the lowest.'
The Commission found large pre-tax price differentials exist for medium segment cars popular with fleets. For example, in Finland you can buy an Opel Astra for 9,446 Euros but in the UK it is more than 5,000 Euros more expensive at 14,479 Euros.
And the Volkswagen Golf in Finland costs 8,937 Euros but again the most expensive country is the UK where the car costs 11,994 Euros, an extra 3,057 Euros.
However, the EU-wide price differentials for premium fleet brands such as Mercedes-Benz and BMW are not so vast.
A Mercedes C180, for example, costs 20,747 Euros in Sweden, the cheapest market, and 22,676 Euros in the UK, the most expensive market. It is an increase of 1,929 Euros.
Any price disparity though presents pan-European fleets with the opportunity of sourcing cars cross-border and exploiting the different national tax regimes.
In response the Commission's figures, the European Automobiles Manufacturers Association (ACEA) said price differences for cars in the European Union are smaller than for other consumer goods.
It also highlighted the fact that tax levels vary greatly in Europe from 15% in Luxembourg to 200% in Denmark.
'For ACEA, this proves beyond any reasonable doubt that the allegation that the specific distribution arrangements in the motor vehicle sector lead to higher price differences is manifestly unfounded,' it added. (July/August 2001)