Fleet News

EC to tackle car tax and block exemption

June/July 2001: The European Commission will present a 'Communication' on vehicle taxation within the European Union later this year, around the same time it unveils its vision for the new car distribution block exemption.

Car manufacturers claim they are forced to adopt significantly different pre-tax pricing strategies within the EU because of the different national tax systems, and highlight the fact that cars are one of the few items taxed in the country of use rather than the country of acquisition.

Consumer groups, however, argue that they are unable to exploit these pre-tax pricing differences because of the supply constraints that manufacturers can impose on their franchised dealers through the block exemption.

An official statement from the EC said the vehicle taxation Communication would 'deal with issues such as double payment or non-refund of registration tax paid when private vehicles are moved permanently from one member state to another.

'The Communication will also examine the very different levels of vehicle tax in member states and the problems these differences can create for the free movement of goods in the internal market.'

The EC has already outlined five basic scenario for car distribution when the current block exemption expires in September 2002:

 

  • Free-for-all distribution where independent motor vehicle retailers have the right to purchase new cars directly from manufacturers or franchised dealers.

     

  • Exclusive distribution where the manufacturer agrees to sell new vehicles only to one dealer in a particular territory.

     

  • Qualitative selective distribution where the manufacturer selects dealers on qualitative criteria.

     

  • Qualitative and quantitative selective distribution, but without territorial exclusivity for the dealer.

     

  • Qualitative and quantitative selective distribution where the manufacturer can establish limited exclusivity, but dealers would not be restricted from selling in other territories.

    Arthur Andersen Business Consulting will analyse the strategies on behalf of the EC, investigating possible impacts on manufacturers, dealers and consumers, but will not make a proposal for the future distribution system.

    In a potential reference to fleet business, the EC has called on Arthur Andersen to investigate the effects if manufacturers introduced mass rebates for dealers which purchase large numbers of new vehicles, thereby allowing those dealers to earn higher margins than dealers with fewer sales. (

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