Dealers across Europe are worried about possible changes to Block Exemption rules but feel powerless to influence EC commissioner Mario Monti's decision making.
That is one of the major conclusions from the first-ever pan-European dealer survey on the issue, carried out in June by NOP World for PricewaterhouseCoopers and Automotive Management. It questioned 144 dealers in Belgium, France, Germany, Luxembourg, Netherlands and Spain.
While most dealers admit that change is inevitable, the overwhelming majority (72%) want Block Exemption retained in its current form. However, only 24% believe it will be left intact.
The survey found that 17% of dealers had already planned for a change in Block Exemption.
A further 56% said they were thinking about what changes they had to make while 28% confessed they hadn't started thinking about Block Exemption. These 'head in the sand' dealers were from the same group that thinks Block Exemption will be retained in its present form.
Elaine Hardy of Hardy & Associates, experts in car distribution, said: “It's hardly surprising they haven't done anything because it is the manufacturers who will dictate changes just as DaimlerChrysler has done with Mercedes-Benz in the UK.
“It can't be that they are all very conservative.” Ms Hardy believes the overriding message was that dealers had a total lack of faith in manufacturers.
“They feel so on their own that they are not doing anything about Block Exemption,” she said.
Sixty-three per cent said they had not tried to influence the thinking of their manufacturer partners in any way – that, said Ms Hardy, was because they feel they have no influence.
The survey revealed that nearly all dealers (82%) want further legal protection against manufacturers from a revised Block Exemption, with 74% demanding more protection when carmakers set sales targets.
One-fifth want longer dealer agreements but only 5% want longer termination periods.
Professor Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff Business School, said: “They have obviously been looking at the US model where dealers are pillars of society and are one of the most over-represented groups on the State Legislature.
“Their legal position in terms of selling cars and their relationship with manufacturers is cast iron and this is something European dealers will be thinking about particularly in the light of recent events with Mercedes-Benz.”
The survey underlined the critical nature of the relationship between dealers and manufacturers, irrespective of future legislation changes.
More than half (59%) of dealers are worried that manufacturers will apply pressure on the EU by putting great emphasis on threats to jobs if Block Exemption is radically changed.
Ms Hardy believed this was a red herring.
“It's an important issue for the 120,000 car dealers in the EU each supporting between 10 and 50 jobs, but not an important one for manufacturers,” she said.
The survey revealed that most of those surveyed expected there would be fewer dealers post Block Exemption review, each with a larger European footprint selling in more than one country.
“We will see the better dealers get bigger because they want the opportunity to be more entrepreneurial,” said Prof Rhys.
“The survey also shows that the manufacturers have not made the best of Block Exemption as far as dealers are concerned and in many respects they have been too clever for their own good.
“I think it is significant that many dealers have said they are not worried about changes to Block Exemption and that gives the EU a lot of ammunition if it wants to make changes or bring it to an end.
“Having said that, I don't think the EU will have the courage to sweep it all away. The present system has done dealers few favours and the survey shows they can work in a more liberalised regime. They don't want territories because they want to be able to compete with the supermarkets and dotcoms who will be able to sell nationwide.
“Dealers want to be able to fight on their own terms, to be comfortable with their own ability and to take a positive approach to selling cars.
“They do not want to be frightened of putting a toe in the water or to live off favours from the car manufacturers,” added Prof Rhys.
Of those dealers who want Block Exemption retained, a surprisingly high 35% believe their business will be less profitable by 2005 compared to now. Twenty-eight per cent predict they will be more profitable, while 27% expect no change.
Eighteen per cent said they did not want to see Block Exemption retained – 42% of these predict improved profitability by 2005, compared to lower profits (15%) and no change (27%).
The results show that most dealers who want Block Exemption to be modified expect the changes to be beneficial to their business.
However, despite their personal preferences, 63% believe Block Exemption will not be retained in its current form. Of those, 66% said they wanted dealers to be able to sell anywhere in their own country while 69% agreed that the industry had failed to make Block Exemption work properly.
More than half the dealers questioned (53%) thought that Block Exemption revisions would not threaten the future of their dealer group; 41% said it would. Eight dealers did not know.
Ninety-eight of those questioned (68%) said that revisions would result in further consolidation of dealer groups.
Most are also agreed that the ability to sell cars anywhere in the country would also encourage cross-boundary retailing, with dealers moving into important markets like the UK, Germany and France – 28% strongly agreed with this and 33% tended to agree.
Interestingly, 59% do not believe that carmakers want to take control of sales away from dealers in order to retail cars direct to private buyers, despite DaimlerChrysler UK's action and reported speculation about other manufacturers.
Dealers are divided (50% 'yes'; 44% 'no') on whether one form of Block Exemption can work across all EU countries, with 51% preferring individual states to be able to opt out and have their own government draw up legislation.
Overall, most dealers (60%) agree with Mr Monti's assessment that the industry has failed to make current Block Exemption work properly.
Perhaps more tellingly, only 8% of dealers admitted to understanding 'very well' the issues involved in Block Exemption revision while 2% said they didn't understand it at all and 19% said they needed to know more. Forty-four per cent said they understood the issues 'reasonably well' and 26% said they were 'OK'.
There are also interesting national variations. In Germany, 93% of dealers claim to understand Block Exemption 'reasonably well' or 'OK'. But in Spain, 46% confess to needing more information.
Of the dealers admitting to having no knowledge about Block Exemption, most (67%) were from Belgium, which currently holds the EU's rotating presidency. Their neighbours in Holland accounted for the remaining 33%.