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EC report suggests failure of Exemption

Retail Motor Industry Federation officials are to meet Trade and Industry Secretary Stephen Byers this autumn to discuss the review of Block Exemption which, according to EC officials, has failed to work in the way intended.

The final countdown to changes in European motor retailing begins when the formal two-year review period starts at the end of next month.

Alan Pulham, National Franchised Dealers Association director and RMI chief executive David Evans met Mr Byers last month to talk about Government plans to act on new car prices because of the continuing uncertainty.

Mr Pulham said: “There could be provision for individual countries to amend the regulations which replace current Block Exemption in October 2002.”

Mr Pulham said the RMI had told Mr Byers motor retailing in the UK was working “pretty well”. Consumer groups made much of 26,000 complaints a year but dealers and specialists carried out 12m car services.

He added that an OFT report into car servicing and repairs - expected to be published soon - was likely to be critical. An EC document which summarises the opinions of European automotive industry executives questioned last year represents a consensus view that manufacturers have too much power, the opinion of the OFT when it referred new car prices to the Competition Commission.

The EC report says the Block Exemption ban on multi-branded stores restricted “new formats of motor vehicle distribution”.

It adds that manufacturers' margin and bonus policies put a limit on dealers' financial leeway. There was “almost no justification” for manufacturers insisting dealers had servicing facilities because the “natural link” no longer existed.

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