Sir Richard Branson, speaking as chairman of the Internet car sales company VirginCars, has called for the end of the block exemption in car distribution in the EU, saying this would led to an average 5 per cent cut in new car prices and give “greater leverage to the consumer.” Different brands should be sold next to each other in the same premises, like other goods, Sir Richard told the Economic and Monetary Affairs Committee of the European Parliament in Brussels. He said the change should happen “in seven months” rather than the seven years proposed by others.

The committee’s public hearing on car distribution is part of a major consultation being conducted by the European Commission as it considers whether or not to renew the block exemption, which ties dealers to motor manufacturers and which expires in September next year. The committee’s “rapporteur” on the subject, (who is charged with making recommendations), Christoph Werner Konrad, a German Christian Democrat, acknowledged that new car prices varied by more than 20 per cent in the EU countries but said changes should be made over seven years. During this time dealers should be allowed to market more than one brand of car and use direct marketing on the Internet, he said.

For the manufacturers, Jean-Martin Folz, CEO of PSA Peugeot-Citröen, said block exemption had permitted innovation and competition and its abolition would not lead to any cut in new car prices. The European Automobile Manufacturers Association said the exemption was “the best possible system.” The European Consumers Organisation strongly disagreed, saying the scheme served to keep new car prices high.

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