Volkswagen has said that it is talking with dealers and garages about new contracts ahead of the European Union's reform of the rules governing car sales and servicing arrangements.

Volkswagen plans to write new contracts by Oct. 1, 2003, when the first changes take effect, it said in a press statement. The contracts will be uniform throughout Europe.

The new EU Commission rules reform the current 'Block Exemption' for the automotive retailing sector from EU competition laws. Currently, carmakers control the bulk of European distribution through a network of captive dealers in defined territories, as well as effectively controlling service and repair networks.

From October 2005, car dealers will be free to set up sales points anywhere in the EU and will not be bound by location contracts tying them to a specific territory.