Fleet News

Report calls for new block exemption regulations

A consulting company asked by the European Commission to prepare a report into the future of block exemption has recommended an entirely new system of regulation.

Although autopolis did make its recommendation directly to the Commission itself, it is seen as an authoritative body in automotive consultancy.

The company has made its recommendation six months after preparing the report, The Natural Link between Sales and Service: an investigation for the Competition Directorate-General of the European Commission.

In a new report, The Future for Automotive Distribution and the Aftermarket, the company said that European legislators are facing three options for the future of block exemption, the legislation that allows car manufacturers to maintain selective and exclusive distribution that is due for renewal in 2002.

They are:

  • Maintain or modify the existing rules.
  • Scrap them totally.
  • Create an entirely new system of regulation (which autopolis said it favoured).

    Autopolis claims its analysis shows that the way cars are sold and serviced needs a clear legal framework. It adds that any new legislation must be based on consumer needs.

    'It must improve consumer choice and encourage fair competition but also protect one group of businesses from the abuse of others,' autopolis said, adding: 'This would address the wrongs of the current legislation - which a free-for-all would only make worse. We have looked at all three options very carefully,' said autopolis director Dr John Wormald.

    'We've looked at which offers the best deal for consumers - the greatest convenience, choice, quality and price. We've looked at which is in the best long-term economic interests of vehicle manufacturers, parts makers, dealers and independent garages.'

    Wormald said the company had looked at the options 'in the light of the Commission's objectives of promoting competition within the Single Market' and that: 'In all cases, a new piece of consumer-driven legislation is superior.'

    However, Wormald warns, the transition to a 'better system' could take as long as 10 years and will require a 'lot of new thinking, mostly from carmakers'.

    'But it should help free them from the vicious cycle that they are now caught in,' Wormald claimed, 'of introducing an endless stream of new models in the vain hope of gaining share in a saturated market.'

    He added a transition could be used to simplify car servicing and ensure that motorists maintain their vehicles properly. 'The transaction isn't going to be easy,' Wormald said, 'but that doesn't mean it is not the right thing to do.'

    The report prepared by strategic consultant autopolis revealed that the fast-growing European fleet market was destroying the link between sales and servicing at franchised dealers.

    As reported in February's issue of Fleet News Europe, the company said fleets are using independent agencies, garages and bodyshops rather than franchised dealers for pre-delivery vehicle inspection, servicing and accident repair.

    'Although franchised dealers may be nominally involved in the sale of new cars to fleets, these cars often move away from the 'supplying' dealer,' said the report, The Natural Link between Sales and Service: an investigation for the Competition Directorate-General of the European Commission.

    (July/August 2001)

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