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Unblocking the channels
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Van manufacturers say they need Block Exemptions for efficiency; consumer groups say they make vehicles and parts more expensive. Could they both be right? John Kendall investigates.
Shopping for a new washing machine couldn't be easier; just take a trip to your local electrical retailer and choose from a variety of models produced by a variety of manufacturers. There you can compare prices and specifications without leaving the shop, saving yourself time, hassle and shoe leather.
Try doing that with a van and it's a very different story. Your best bet is to arm yourself with a copy of Yellow Pages,or get on the Internet to find the dealers. If you find one who handles more than one make of vehicle it will be a minor miracle, so you can look fonvard to a day spent driving between them, gathering armfuls of brochures to compare specifications and taking test drives. It's little wonder that some buyers simply ask their mates in the pub. Block Exemption is to blame for all this. It grants the motor industry as a whole an exemption from the competition regulations laid down by the European Commission.
If the European Union had its way, it would probably have swept Block Exemption aside in the mid-nineties when the whole issue came up for review But it settled for something much less dramatic when it imposed new rules from October last year, giving manufacturers a year to get their new networks in place.
All change...?
Under the new rules manufacturers have had to sack all their dealers, most of whom then applied to be dealers under the new system.
Most manufacturers have opted for "selective distribution". This ends the manufacturers' right to allocate sales territories to dealers, who are now free to compete across borders. Manufacturers can still select dealers, but based on either qualitative and quantitative, or solely qualitative criteria.
Quantitative in this case means that a manufacturer can limit the number of dealers in its network. Any business meeting the manufacturer's criteria can join the network, but cannot sell to dealers outside it. Dealers can also operate secondary sales outlets if they think it's worth it.
Just as importantly from the buyers' perspective, the rules also apply to servicing and repairs. Any garage can apply to a manufacturer for authorised repairer status, but they are free to source parts from wherever they like, including the original manufacturer.
This should ensure parts prices fall as competition opens up.
There are still issues to be resolved, however. Under the old system manufacturers might have allowed independent repairers to carry out servicing during the warranty period, provided that the garage was equipped to dealer standard and the technicians had taken the relevant training programmes.
But as Ray Holloway, director of the independent garage and fuels division of the Retail Motor Industry Federation (RMI) points out: "Block Exemption does not deal with the issue of who should carry out servicing in the warranty period. We have requested clarity on the position, as it is currently open to interpretation."
This is particularly relevant for operators who handle their own servicing.
The RMI referred the matter to the Office of Fair Trading.
"It is one of the most fundamental issues to be answered," says Holloway. "An OFT statement should resolve this."
Although the RMI hoped that the OFT would have issued a statement by the beginning of October, it has not done so. Nonetheless, Holloway is pleased with the progress that is being made: "Following a survey of franchised and independent dealers, they are currently looking at what the consumer knows. Its the last piece of the jigsaw and it looks as though they have got into it."
Provided it results in clear guidance from the OFT he believes it will be worth waiting for. Otherwise the RMI will make an appeal to the OFT, and if that fails it will take the matter directly to the EU's Competition Commissioner in Brussels.
Or more of the same?
For now, don't expect to see big changes in either sales or servicing. Mercedes-Benz is the only manufacturer selling cars. trucks and vans and now vans will only be sold through its truck dealers.
Iveco split its light and heavy operations in the past year or so and doesn't expect to do anything different under the new rules.
Among the light vehicle manufacturers,only VW operates a net work of stand-alone van dealt and it doesn't expect to make a great changes, except to boost t number of service outlets.
Renault Cars has jt announced a pilot scheme for se arate van service outlets and th will be expanded if it's a success.
Renault says it has not be driven by Block Exemption b by a lack of service capacity in ti dealer network.
Citroen plan to expand its IR work of sales outlets from 233 260 with a big increase in servi outlets, up from 233 to 350.