With six weeks to go before the biggest change in Europe's motor industry in decades, dealers and manufacturers are at odds, Automotive News Europe said.

The two sides are battling over the standards manufacturers are setting for dealers and authorised repairers when the industry's block exemption from EU competition law ends in October.

The European Commission has demanded that BMW, Volkswagen and Citroen produce written responses to complaints from dealers about the way they have handled their new contracts. Opel dealers have also complained to the commission.

Juergen Creutzig, president of the European dealer association CECRA, said many manufacturers have set standards so high that many dealers and authorised repairers cannot afford to meet them.

The manufacturers' behaviour runs counter to European Competition Commissioner Mario Monti's intentions to liberalise car sales, Creutzig said.

Monti wanted to free dealers and repairers from the tight restrictions currently imposed by manufacturers.

"Some manufacturers want to give dealers less freedom than they had before, not more," said Creutzig.

The new EU rules should allow dealers to sell cars from any manufacturer.

But Creutzig said car makers are trying to squeeze dealer margins and make it more difficult to sell other makes despite the new rules.

VW and Audi, for example, are reducing fixed margins - the difference between the price the dealer pays the manufacturer and the recommended retail price - from 17% to 10%.

VW and Audi are offering dealers a higher bonus as a remedy to the reduced fixed margin, but dealers can qualify only by investing money to upgrade their premises to manufacturer standards, Creutzig said.

The European Commission wants to avoid formal proceedings against manufacturers and hopes to resolve the issues before October 1, said spokesperson Tilman Lueder.

CECRA is recommending that dealers sign new contracts, even if they believe the contracts do not comply with EU law. Creutzig said dealers could face ruin if they refuse new contracts.

"Dealers and repairers have no choice," he said. "If they do not sign, they will not have new cars, tools, equipment and training, and the business is out. It's bankrupt."

The commission has demonstrated in the past that it will fine manufacturers who flout its rules.

In 2001, DaimlerChrysler was fined €72 million and Volkswagen €30 million for infringing European competition law.