Fleet News

Fleet News industry conference 2003: Benefits to Block Exemption changes explained

CHANGES to the car distribution Block Exemption could mean leasing companies achieving better residual values for their end-of-contract cars.

The new regulations, which came into force in October this year, give leasing firms the right to set up their own independent repair shops.

As well as keeping costs down, such a move could also mean better residual values are achieved for defleeted cars as they are sold with an authorised full service history. Under the new regulations, manufacturers must provide independent repairers with access to training, tools and repair shop equipment for a fee.

This paves the way for leasing companies to set up their own networks, European Commission administrator John Clark told delegates at the Industry Conference.

He added that the new regulation was designed to be less prescriptive, more flexible and create better conditions for competition. It covers the sale of new cars and also servicing and repair.

Product allocation from manufacturers is no longer limited to local demand and dealers in selective distribution – one of two choices for manufacturers under the new legislation and by far the most popular – can sell vehicles to all 'end users' and will have the freedom to open further showrooms from 2005.

Under the selective choice manufacturers can insist a dealer meets qualitative and quantitative criteria.

The legislation counts leasing companies as 'end users' if the lessor cannot become the owner of the vehicle before the end of the leasing contract and as long as the vehicle is still new. This prevents leasing companies from becoming 'grey sellers', Clark told the conference.

He added that the European Commission took enforcement of the law 'extremely seriously' and that it would not hesitate to act 'vigorously' against companies in the future should they not meet the legislation's demand.

  • The European Commission has launched a brochure explaining Block Exemption which can be found online at http://europa.eu.int/comm/ competition/car_sector/ or in the Useful Stuff section of FNN.
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