Carwow appoints legal experts to contest BMW dealer ban

By Tom Sharpe
|
7 June 2016

Carwow has appointed legal representatives in a bid to lift a BMW UK ban on its franchised dealers use of the online market place’s services.

Chief executive James Hind has told AM that the “specialists in competition law” were called in as a last resort after talks with the manufacturer fell down, leaving its retailers without the option of using the online platform.

Part of the action against the German brand has already seen it reported to the Competition and Markets Authority.

Hind said: “Over some time we have had talks with BMW retailers about their use of Carwow and it is an apparent source of frustration that BMW will not allow them to use our service.

“Many of those that we have spoken to are large groups who are already using carwow in their other retail operations and want to reap the same rewards for their BMW operations.

“Due to BMW’s stance, they simply cannot and it is them and the customer that is losing out.”

Hind said that representatives from Carwow had held talks with officials from BMW UK, but said that they were “unwilling to move”.

He said that he would happily end the business’ action against BMW if it decided to change its stance.

A spokesman for BMW UK told AM that the brand was aware of the legal situation.

He added: “It’s something we feel that Carwow does not have any substance in European law in making their claim so there is a discussion between the two legal departments.”

Earlier this year Carwow raised £12.5 million from investors, including Spotify and Dropbox backers Accel Partners.

The startup was launched by chief executive James Hind, Alexandra Margolis and David Santoro in 2013 and allows users to put details of the car they are searching for and the details are passed to dealers.

The consumer then receives up to five offers from the best-rated dealers who they can then contact directly.

Hind said: "At Carwow, we enjoy working with the industry to make things simpler and more efficient for all involved."

Author: Tom Sharpe

Former news and features editor (left May 2023)

tom.sharpe@bauermedia.co.uk

01733468343

Comments (9)

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Comments

Brian Whale - 07/06/2016 09:29

We would like to take legal action against Carwow to shut them down. They are eroding the margins and has a negative impact on RV's. They no friends of car retailers. I have stopped using Drop Box and Spotify for their involvement.
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Peter Smyth - 07/06/2016 12:18

the market place is the market place! If the manufacturers set their sights lower with regard to Dealer Targets, the likes of CarWow would simply not exist ???
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chizzy - 07/06/2016 12:24

@Brian Whale Whilst I have sympathy with what you say, the issues run deeper than that surely. If dealers, en bloc, didn't use the services of Carwow then the matter of your argument disappears. Secondly. if the manufacturers provided a better business model for their dealers then there would be less incentive for customers to feel compelled to shop around so much. BMW are already one of the few manufacturers who float the Supply of New Cars Order 2000 when it comes to the retail market, so it doesn't surprise many of us that they would take this sort of stance by attempting to influence the market.
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Binty - 07/06/2016 12:59

It's a brave move but where does it end? If they win, what happens if a dealer group removes all of their retailers from Carwow, would Mr Hind an co then sue the dealer group? If the manufacturer caps the contribution to the dealer on the car and Carwow don't think its enough will they then sue the OEM for not discounting enough? Which ever way this goes, can manufacturers really trust Carwow not to spring a lawsuit on them when they don't get their own way? What impact will this have on other online advertising such as AutoTrader, could BMW not want to advertise through AT but their hand is forced as it's 'not fair' on consumers for the approved used car scheme? Theres been a lot of negative press about AT recently but doing this is surely worse...
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- Jennifer - 09/06/2016 16:55
  
  BMW dealers have the right to choose if they want to use a route to market or not. If they don't want to use carwow, then they don't have to. If they do want to use carwow, they should be allowed to and BMW shouldn't stop it. BMW force huge targets on the network and dealers end up pre-reg'ing to hit them, so what do BMW care if the dealers sell to actual customers or not - their UK target is still being achieved. What's next, banning their dealers using AdWords or Autotrader and saying go and hit your target still!
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Kel - 11/06/2016 16:30

Are not Carwow just another organisation trying to take a share of dealers already slim margins? **edited for legal reasons**
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Ian Allen - 13/06/2016 08:45

Perhaps not the best marketing ploy by Carwow to be suing its customer..... Before they actually are their customer.
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Graham Christian - 10/08/2016 09:49

Carwow ...**edited for legal reasons**... makes it harder (especially for smaller dealers) to get the deal from the customers after all the hard work. They reduce residual values of the cars, they don't increase sales for the manufacturer as they would've sold the car anyway (carwow or no carwow) and they encourage the customer to use a dealer that may be hundreds of miles away from them so they don't get the proper, personal and local aftercare and service they deserve. The worst thing about it all is that the customers will use their local dealer for the test drive, information and advice and then use carwow to buy the car!!! In some cases, the customer knows full well that the dealer that has already spent time, money and resources helping them choose the right car isn't listed with carwow. This then means that not only has the customers local dealer lost the business but it has cost that dealer time and money. I think carwow puts unnecessary pressure on an already difficult industry. Their are many factors that are already making it hard for dealers to make good money from selling cars i.e. The growing popularity of leasing, the internet, brokers, growing dealer networks etc etc. The industry doesn't need or want carwow yet carwow seem to be holding the industry to ransom. It is ultimately costing Sales Exec's, Managers etc a lot of commission and bonuses (which they rely on to support themselves and their families). As far as i'm concerned, carwow need to go and dealers need to stop using them and go back to doing business the way it should be done... Good old fashioned negotiation over the desk. I am glad and proud that my family run dealership doesn't choose to do business in the carwow way but instead, offers everyone great service and a fair deal for all of it's customers from a well experienced and knowledgeable sales team.
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- James - 13/02/2017 01:42
  
  Speaking as a consumer here .. You mention that customers don't get the local support or aftercare, but as carwow is for new cars, you will obviously be buying from a franchised dealer. If I, as a consumer, can buy the car from a dealer lets say 100 miles away for £3 or 4k cheaper than my local dealer, why wouldn't I?! I can still use my local dealer for aftersales support and servicing? I agree that some people use the local dealers to do the test drives and then go on carwow to get the best deal, which does cost the local dealers time and money .. but on the other hand you have to ask, why couldn't I get the same deal from my local dealer? After all, from a consumers point of view, I'm buying a car from say Audi or BMW, not the local dealer group such as Sytner or Ridgeway. If I'm being completely honest, I couldn't care less which group I buy from .. I just want the car at the cheapest possible price. It's only natural to want the best price, no? There is a British disease that people feel awkward haggling and negotiating a price. I think that if some people feel awkward or uncomfortable negotiating, then surely it is a good thing having a service like carwow on your side? It doesn't happen so much these days, but there are some older salesmen who still use the more aggressive, in your face sales techniques and people can be intimidated. This almost reminds me of the friction between the traditional London cabbies and services like Uber. It is MUCH easier, cheaper and more convenient to use something like Uber, so that's what consumers want. In the long run, it's much better for businesses to embrace what the consumers want, rather than try and force consumers down a different route. At the end of the day, if people want to use carwow, they will .. and it looks like they do! I guess BMW are in a position where it probably won't matter if they don't use carwow, because people are always going to want BMW's anyway! Coincidentally I have actually just bought an Alfa Giulia through carwow this week, saved about £4k off asking price. Couldn't be happier!
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Martin Carr - 13/10/2016 07:17

Carwow has come to the forefront of argument really in 2016. Now it looks like WhatCar? Is doing the same as competition to Carwow. But, if the model worked to increase 'retail' customers into the dealerships, why is their a decline in retail registrations? Surely if this was the best route to business for all, retail registrations would be on the rise. The only thing it is doing is hurting residual values and giving the industry the 'Arthur Daley' look again. When a customer sits infront of a sales executive and a deal is negotiated, then the manager comes over to second face and the deal can't get better, the customer then whips out a carwow quote from a dealer 250 miles away with no thought or probably a business in 5 years. What does the customer think of their local dealer then? Is all mad!
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rtr - 17/08/2017 02:13

Car Wow - Its just another race to the bottom , they are nothing without the support of the dealer network , do you think Luis Vuitton or Hermes would allow their luxury products to be sold in this way? I don't think so.
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