Trade Secretary Stephen Byers’ plans for ‘immediate remedies’ for the troubled UK motor industry are likely to progress at the pace of a ‘Sunday driver’ rather than the break-neck speed of Formula 1 warn business advisers Grant Thornton.
Talking about the recently issued Competition Commission’s Monopoly report, Preston Ayres, Head of Motor Retail at Grant Thornton, said: “Procrastination seems to be an unnecessary enemy of price transparency in the UK motor industry.
“The industry and the public have been presented with the largely sensible and progressive recommendations of the Commission. Some of these recommendations are expected to be implemented by Order under the Fair Trading Act 1973 as ‘immediate remedies’ by Stephen Byers’ within a promised two month time period. Representations are invited, however, by 19 May. In reality, it is more than likely that these representations will raise additional queries which could delay the process further.”
Byers’ ‘immediate remedies’ include:
requiring suppliers to offer dealers who buy cars outright, equivalent terms including volume discounts, to those offered to fleet buyers.
requiring suppliers to provide their dealers with regular statements of terms they are prepared to offer which reflect terms given to fleet customers.
suppliers will be prohibited from imposing conditions or targets on dealers in respect of the number of cars a dealer registers during a certain period, or giving a dealer an advantage which is dependent on the number of cars the dealer registers during a certain period.
Ayres applauds the Trade Secretary’s view that these measures should increase transparency and price competition by encouraging suppliers and dealers to set a market clearing price for new cars. However, he believes the reality will be somewhat different.
A major delaying factor is the EU Block Exemption rules which formally run until September 2002. The rules impose stringent controls on motor dealer activity by suppliers. “The Trade Secretary intends to press the European Commission to enforce rules allowing UK dealers freedom to import without disadvantage – but I can see the Block Exemption issue being left for the 2002 review. Major change will not happen until the Block Exemption issue is tackled, ” said Preston Ayres.
He added: “Consumers too, as well as dealers, are having a tough time not only paying over the odds for new cars but also making sense of the many ‘special offers’ available regarding free insurance, 0% finance and cashback deals.
“When the public can see they are getting a good deal all parties in the motor industry will benefit and car sales are likely to increase. The key to this success is the implementation of Byers’ remedies, I can only urge the Trade Secretary to make a difference now!”