Fleet News

Servicing costs report fuels debate over block exemption

A REPORT warning that fleets could be spending up to one third more than they need to on car servicing by choosing a franchised dealer instead of an independent garage has intensified debate over the future of the block exemption.

A new report, The Car Service and Repair Sector in Great Britain, published by MFBI, says that higher labour costs are the main reason for the price rise.

The average service cost and front brake pad replacement including labour parts and VAT came to £176.16 at franchised dealers but £130.46 at independent garages - an average 35% difference.

The news of a pricing imbalance between franchised dealers and independent garages has intensified debate over the block exemption, the selective and exclusive distribution agreement for new cars, which is due for review in 2002. The study accuses dealers of running a service monopoly on new cars despite the dealer network being technically illegal in European Union competition law.

Under a review of block exemption, the sales and service elements of the dealer network could be split up, to encourage more competition and drive down prices.

The report said: 'Given the European Commission's views that the existing regulations have largely failed, it is unlikely that the regulation will be renewed without major restructuring.

'However, if the current exemption is abandoned, it is almost certain that the distribution and servicing of cars will continue to be regulated in some form due to increasing technical complexity of cars and safety liability.'

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