UK consumers could see new car prices fall as a result of changes in the way vehicles in Europe are sold, the BBC reported on its website, adding that, from Wednesday, car manufacturers will no longer be able to tell dealers that they cannot sell competitors’ vehicles and, as a result, the number of dealers selling many brands at discount is expected to grow.
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The report added that manufacturers, through their franchise dealer network, will lose control over the car service and spare part markets – the new rules will replace the current “block exemption on motor vehicle distribution and servicing agreements” which has protected the automotive industry from free market competition for two decades.
The BBC said the exemption agreements expired on 30 September 2002, though car makers were given a year’s grace to comply fully with the new rules, while consumer groups have long argued that the car industry’s exemption from European competition law has allowed a rigid network of national or regional dealers, selected by car manufacturers, to flourish.
The BBC said that one restriction has been the assumption that car dealers must also provide after-sales services. Now, under the new rules, car makers will no longer be allowed to demand that an authorised mechanic also sells new cars, and manufacturers will not be allowed to limit the number of, or decide on the location of, any authorised repairers, the report said, adding that independent garages will be given better and fairer access to technical information, training, tools, repair shop equipment and original spare parts.
The BBC said consumers will also have greater freedoms to chose between original parts and parts made by independent specialists.
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By GlobalData
Phil Evans, principal policy adviser at the UK’s Consumers’ Association, welcomed the reforms of the Block exemption, the report said.
“The key to this will be when dealers are more like retailers and side with the consumer, while service outlets focus much more on their core tasks rather than cross-subsidising other parts of the business,” he told the BBC.
