According
to a report in the Financial Times, Mercedes Benz car dealers indicated on Tuesday
that they are ‘close’ to a settlement with DaimlerChrysler UK over its plans to
radically restructure its UK distribution network. The company is in conflict
with its dealers over plans to replace the current network with "market area
concepts" requiring only 35 independent dealers instead of the current 155.

Strategic
Review-


DaimlerChrysler

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The news of a possible settlement between DC UK and its dealers comes ahead
of a High Court action scheduled for July 16. Dealers are seeking to have the
notices of termination served by DC UK in February and effective from this December,
declared illegal. Secret talks between DC UK and representatives of the dealer
network are reportedly taking place this week.

Last December, the dealers were given a year’s notice that they would lose
their franchises in a major restructuring of the UK M-B sales and service operation.

UK vehicle distributors and their dealer networks will lose the European Union
‘block exemption’, which permits exclusive dealer-distributor franchise agreements,
in September 2002 and DC UK, apparently anticipating the new legislation, has
taken the controversial action of terminating its current dealer network.

Though it has yet to make an official announcement, DC UK is understood to
be planning a new ‘hub’ network of 11 large, mostly company-owned ‘Experience
Centres’ to sell its vehicles, supported by smaller service centres, only some
of which would be recruited from the current network of full-service Mercedes
dealerships.

To view related research reports, please follow the links
below:-

The
world’s car manufacturers: A financial and operating review

Automotive
regional report: Western Europe

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