| Author (Person) | Davies, Eric |
|---|---|
| Publisher | ProQuest Information and Learning |
| Series Title | In Focus |
| Series Details | 18.7.02 |
| Publication Date | 18/07/2002 |
| Content Type | News, Overview, Topic Guide | In Focus |
|
From October this year the way in which cars are sold and serviced in the EU will be fundamentally changed, thanks to a Regulation adopted by the European Commission on 17 July 2002. The 'bold but balanced' initiative aims to increase competition in the motor vehicle sector and ensure a better deal for consumers. An evaluation undertaken by the European Commission showed that the current Regulation - introduced in 1985 and amended 10 years later - has not ensured sufficient benefits for consumers. There are, for example, still significant differences in new car prices between EU Member States. The new Regulation addresses two main issues: sales and service. According to Competition Commissioner Mario Monti, 'The cost of repair and maintenance of a car is as high as the purchase price. It is therefore appropriate to provide equally effective measures for both sales and servicing.' One of the biggest changes which consumers are likely to see with respect to sales, is that dealers will be allowed to stock new vehicles from different manufacturers, thus enabling consumers to see more than one brand in a single showroom. The Regulation will introduce a system under which dealers choose to be either 'selective' or 'exclusive'. Those in a selective distribution system will be able to target consumers throughout the EU (e.g. through advertisements or mail shots) and will also be allowed to establish secondary sales outlets or delivery points elsewhere in their own country and/or in another EU Member State. 'Exclusive' dealers will be able to target independent resellers within their exclusive territory and also respond to approaches from resellers and consumers located outside their territory. Dealers will be free to buy other outlets of the same brand anywhere in the EU - a move intended to promote the development of cross-border dealerships and to create larger distributors who will have greater bargaining power with manufacturers. Regarding service and repair facilities, dealers will not be obliged to carry out repairs - as they do under the current legislation - but will be able to decide whether they wish to do the work themselves or sub-contract it. The possibility of becoming an authorised repairer for a particular manufacturer will no longer depend on selling that brand of car; both independent repairers and car dealers will be allowed to become authorised repairers. Independent repairers will be entitled to appropriate technical information, tools, equipment, including diagnostic equipment, and training. (The European Consumers Organisation claims that 'services offered by official repairers are not better than those offered by independent repairers and often much more expensive'). Restrictions on the supply and use of 'non-official' spare parts will largely be lifted, thereby increasing competition for the supply of parts and giving consumers more choice. Parts manufacturers will be allowed to display their own logo alongside that of the vehicle maker on original spare parts and will be able to sell parts direct to repairers without losing the designation 'original spare part'. The Regulation comes into force on 1 October 2002, although there will be a one-year transition period to allow existing contracts to be adapted, and dealers will not be able to establish additional outlets where it suits them until 30 September 2005. It will apply in varying degrees to the sale and after-sales services of passenger cars, light commercial vehicles, trucks and buses. The Financial Times described the initiative as 'the most radical shake-up in the industry for nearly two decades', but pointed out that the reforms had been 'strongly opposed by carmakers and the German and French governments.' Whilst noting that the Regulation will 'divert considerable control from car manufacturers to dealers', the BBC also reported car industry concerns that consumers could lose out, with 'car supermarkets' reducing choice by putting smaller retailers out of business, and cars becoming more dangerous due to the use of non-official spare parts. Opinions on the value of the Regulation differed between industry and consumer groups. A statement from the European Automobile Manufacturers Association said the new rules 'introduce a number of significant changes and create a new environment where it will be more demanding to preserve the interests of motorists and consumers at large.' However, in a press release issued on 16 July, the European Consumers Organisation described the Regulation as 'good for consumers and the Single Market'. Links: European Commission
BBC News Online European Sources Online: Financial Times
European Automobile Manufacturers Association (ACEA) European Consumers Organisation (BEUC)
European Sources Online: In Focus
Eric Davies From October 2002 the way in which cars are sold and serviced in the EU will be fundamentally changed, thanks to a Regulation adopted by the European Commission on 17 July 2002. |
|
| Subject Categories | Business and Industry |
