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Virgin Cars says BE changes are 'good news for consumers'

Virgin Cars believes the changes to the rules regarding the distribution and sale of new cars is good news for the British consumer and will herald cheaper cars and after-sales servicing.

In a statement it warns that to realise these gains for the consumer, the EU must be clearer in its final wording of the changes so that there is no room for differing interpretations by manufacturers, dealers or direct sales operators.

Virgin Cars, having championed the cause of the car buying public for the last 18 months, has challenged the existing Block Exemption system by selling cars sourced from EU dealers, via its direct sales operations (www.virgin.com/cars), for up to 30% less than the manufacturers¡¦ UK list prices.

The company says draft changes proposed to the EU Block exemption rules include:

„h Cars from different manufacturers can now be sold under the same roof, enabling easier comparisons on make, model and prices.

„h Manufacturers can select how they wish to sell their cars and can therefore sell directly to internet and telephone operations such as Virgin Cars.

„h Manufacturers can¡¦t have separate sales targets for different sales territories ¡V only for the EU as a whole. This means that dealers can now supply people wanting to buy from abroad and import a car, without any constraint by manufacturer supply targets.

„h There will no longer be a requirement for dealers to offer after-sales care at the point of sale themselves; they can subcontract this facility. This enables them to focus on sales or after-sales to give value for money and service quality benefits to the consumer.

„h Manufacturers cannot limit access to technical information, training, tools and equipment. This means new independent players can join in and push down prices.

„h Better independence for dealers from the manufacturers as they cannot limit the supply of new cars to distributors who carry out parallel imports, nor can they terminate distribution agreements for behaviour that actually stimulates competition.

Ian Lancaster, chief executive of Virgin Cars said: "We welcome Commission President Romano Prodi¡¦s aspiration for the EC to put car buyers first, and overturn the longstanding dominant position of the car manufacturers.

¡§However, the devil is in the detail and the wording to the changes is complicated, and is open to differing interpretations.

"Because the new regulations have been designed to be flexible, to encourage new entrants and stimulate competition in the single market, the EC must be careful to ensure that they are not abused by the manufacturers when the new regulations are implemented.

¡§Our interpretation is that the new proposals once implemented will bring greater competition to the market and should allow Virgin Cars to source vehicles directly from manufacturers. The new regulations will allow us to provide a true multi-brand retail experience for the consumer and even better value, as we believe we can shave further savings off the cost of a new.

"Added to our after-sales package and our high levels of customer service, this will give us a greater differentiation from the traditional dealer networks."

Virgin Cars will be opening its first physical site later this summer in the South East. It believes this new retail channel reflects the kind of competition that the EC would like to see for consumers in the new car market.

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