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SMMT moves to end muddled debate on Block Exemption

The SMMT has today published a guide setting out what it claims to be the benefits to consumers of the current form of Block Exemption. Called 'Block Exemption – the consumer benefits, it explains why the European rules, which were set up 16 years ago to protect new car buyers, must be renewed in October 2002.

SMMT chief executive Christopher Macgowan said: “This issue is about the need for a system that benefits all stakeholders; it is not about the industry protecting its interests. Governments across the first world recognise that new car buyers must be protected which is why the same rules that apply in the UK and the rest of Europe are mirrored by similar systems in Japan and the United States. It would be easy to break the threads that link manufacturers to their dealer networks. It will be less easy to pick up the pieces if vulnerable consumers start to suffer.”

The SMMT claims the issue has been “clouded” by the arguments, particularly in the media, surrounding new car prices in the UK and wants to encourage a more balanced debate. A spokesman said despite strong signals from EC competition commissioner Mario Monti that Block Exemption could not exist without reform, the arguments on its final form were a long way from being settled.

An SMMT spokesman said: “Perhaps we should have published this guide sooner, but the review is a year away and pointing out to the stakeholders, be they in government or the consumer, the benefits of the existing structure and the implications of change is still valid.”

The report puts forward the argument that it is fluctuating exchange rates and the non-existence of pan-European tax harmonisation that hold the greatest sway on price disparities, rather than manufacturer pricing strategies. The SMMT also warns that dealers may disappear if their territories are scrapped damaging rural economies, in particular; it also says removing the role franchised dealers have in aftersales care could have “serious safety implications for all road users” and that dealers play a crucial role in ensuring compliance with safety recalls.

Free copies of 'Block Exemption – the consumer benefits' are available, in electronic form, by contacting the Nigel Wonnacott at the SMMT. His email address is nwonnacott@smmt.co.uk

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