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COMMENT: Block exemption: reform in the slow lane

By Datamonitor Commentwire | 30 September 2003

When amendments were made to the automotive industry's 'block exemption' legislation last year, many predicted significant change in the way cars were sold and serviced. With the compliance deadline [October 1] looming however, signs of progress are few and far between.

The deadline for adoption of the new laws governing the motor trade is just a day away, yet it seems that many in the business have failed to take action to comply with them. When the EU imposed reforms to the industry's 'block exemption' regulations, concerning the way new vehicles were sold and serviced, a one-year notice period was introduced to give businesses time to make the necessary changes.

Under the new rules, manufacturers must choose a system with which to distribute their new cars - selective or exclusive - in order to reduce the amount of control they exert over the process. However, many vehicle manufacturers have apparently yet to act, despite the October 1 deadline. This delay keeps their dealer networks in the dark over contract agreements, which could be altered or terminated.

The UK's National Franchised Dealers Association (NFDA) has accused manufacturers of a lack of information, leaving any contract amendments "until the 11th hour". NFDA director Alan Pulham said that "many manufacturers have delayed issuing contracts until the final month before the regulation becomes total law", and suggested this was an effort to conceal tactics from their competitors.
Independent repairers, who under the new laws have the possibility of gaining vehicle manufacturer accreditation, are scarcely better off. It is thought that those vehicles still within their warranty period will be serviced by authorised dealers, at least until independent repairers have the opportunity to review the guidelines set by the manufacturers.

When the reforms were unveiled, many within the industry predicted widespread change. It is hardly surprising, however, that vehicle manufacturers are doing everything in their power to preserve the current situation, which gives them greater control over the sales and service of their vehicles, and ultimately a greater share of the revenues. Only once the deadline has passed will we see the real impact of the changes.

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