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Worries mount over carmakers' power

A confidential survey among Britain's leading motor retail groups has revealed deepening concerns about manufacturer power as DaimlerChrysler prepares to confront many of its Mercedes-Benz dealers in the High Court.

Bosses are worried victory for DCUK in the High Court next month could create a precedent for other carmakers. Some are also angry: “Mercedes' action is illegal and badly conceived and the manufacturer is already having difficulty implementing its plans,” said one.

The survey was conducted during the compilation of data for the AM100 which was published in the May 25 issue.

The heads of leading groups were asked for their views on a number of key issues. A majority believed a freer market following Block Exemption review next year would benefit dealers more than manufacturers.

But a majority, when asked a second question, felt that manufacturers stood to gain far more than retailers in the move to larger sales territories.

The underlying theme in the responses was that Mercedes' action in giving all its dealers a year's notice of contract termination was an indication of manufacturer power. There were concerns about Ford's investment in dealer groups.

Wolfgang Reitzle, head of Ford's Premier Automotive Group, is the latest senior carmaker executive to apply pressure on the UK Government to adopt the euro as soon as practically possible. Carlos Ghosn, the head of Nissan, made a similar appeal recently.

Car manufacturers want the EU to become a simpler market and have a single currency as part of their drive to cut costs.

Mr Reitzle, opening the Jaguar X-type plant at Halewood on Merseyside, said Britain's exclusion from the euro would lead to “massive problems for UK exporters”.

In the AM100 survey, dealer group chief executives were asked about Ford's investment in retail businesses and manufacturers' online sales as well as the Mercedes issue. These were some of the comments:

  • “If Mercedes is successful, which is far from certain, it would set a dangerous precedent. The same would apply to manufacturer investment in dealer groups and their efforts to sell online.”
  • “Experience has shown that manufacturers' investment in dealer groups – and serving the public direct – does not work.”
  • “If manufacturers are successful in the three areas, it would be the thin end of the wedge.”
  • “The manufacturers are devaluing our businesses and causing confusion in local markets.”
  • “My concern is overall manufacturer power.”
  • "Manufacturers should keep to manufacturing, dealers should be left to deal – and neither should meet.”
  • “The biggest concern is that manufacturers may disregard the investments made by dealers in their premises.”
  • “Mercedes' action, manufacturer investment in retailers and their direct internet sales are the latest examples of manufacturers' continuing efforts to control their distribution networks.”
  • “Termination of dealer contracts must be increased to three years because some manufacturers obviously aim to completely own or control their markets.”
  • “The Mercedes action is against the spirit of the manufacturer/dealer relationship.”

    A group of Mercedes dealers will in mid-July ask a High Court judge to rule the mass contract termination illegal. DaimlerChrysler UK has denied some dealer groups have turned down offers of new territories.

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