New Block Exemption regulations will come into force in September/October 2003 but a large proportion of garages and tyre dealers in the major European markets are not aware of legislative changes due later this year.

However, Germans are particularly well informed and optimistic, believing that their businesses will grow as the number of franchised dealers falls.

In 1985, Europe's carmakers were given partial exemption from the prevailing competition rules for a 10-year period. The exemption was reviewed and extended in 1995. This led to changes that favoured the franchise dealer network. Dealers were allowed to sell multiple makes of cars, albeit through separate showrooms (although a few single site, multi-marque dealerships do exist).

Changes to the franchise contract were also made, extending the agreement from four to five years, and increasing the termination period from one to two years. The exemption was granted for a further seven-year period, and expired in September 2002. In order to prevent the car industry from falling under general competition rules for distribution agreements when the regulation lapsed, the Commission proposed new regulation which is due to come into effect in Sep/Oct 2003.

Datamonitor's survey of over 700 garages and tyre specialists across the five major European markets reveals that in the UK, 77% of garages and 83% of tyre dealers are not aware of the new Block Exemption regulation.

Across the five major European markets (France, Germany, Italy, Spain and the UK) just 60% of garages and only 37% of tyre dealers are aware of it.

Across Europe, just over half the garages surveyed are expecting the new legislation changes to increase sales volumes. Garages in Spain are the least optimistic, with only 36% expecting an increase in sales volumes, whilst in Italy, over 10% of respondents are actually anticipating a negative impact.

Awareness of the new legislation is particularly high among German garages (81%). They are also the most optimistic over its effects, with 71% expecting a positive impact on the volume of their business. This may be due to the expected consolidation of franchised dealer networks in Germany, which are unsustainable in their current dealer numbers. As the number of franchised dealers falls, independent garages are expecting to win the business left behind.

SOURCE: DATAMONITOR COMMENTWIRE (c) 2003 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.