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Industry experts warn of post revision price rises

Consumers will be faced with higher servicing and repair bills once the revised block exemption regulations take effect, despite claims by the Consumers' Association that prices are set to fall.

The regulations state that independents can service and repair any car as long as they meet manufacturers' quality criteria, which the Consumers' Association believes will increase competition and reduce service/repair prices by up to 30 per cent.

They will also be entitled to access to full technical and repair information and can no longer be excluded from manufacturer training, which is currently provided free of charge to franchised dealers.

However, independent operators will have to invest in their premises and facilities to meet the level offered by franchised dealers, which will force up their costs. And experts now warn that franchised dealers may be forced to pay for training and diagnostics equipment as a consequence of the new rules, due to come into force in October.

“Manufacturers will look to manage growth in aftersales outlets in terms of authorising service points, but it will be a huge challenge for them to provide technical support for all the independents that meet their criteria,” says Professor Peter Cooke, at the centre for automotive industries management, Notting-ham Business School.

Several carmaker sources suggest that they will have to provide twice the amount of training to technicians, and are questioning how this will be funded.

Franchised dealers traditional receive free training and technical support and preferential pricing on diagnostics equipment, but say the sources, this will be impossible to provide for all the independents.

“We aren't going to be able to give away thousands of pounds of diagnostics equipment or offer special prices,” says one executive. “The upshot will be that both independents and franchised dealers will have to fully fund equipment and training, which will lead to higher charges.”

The Society of Motor Manufacturers believes there will be “major practical and cost implications” for carmakers. The SMMT says they do not have the capacity to offer authorised independents and franchised dealer aftersales departments regular and ongoing training without making significant investment in new facilities.

“The franchised network receives regular training to ensure high standards and it is constantly updated on new repair methods and technology,” says an SMMT spokesman. “But there is a concern that this would not be the case if the numbers of authorised repairers went up substantially. One possible scenario is for prices to increase – if there is a higher cost across the board this may well be passed onto the consumer.”

Cooke agrees. He expects prices to fall in the short term as independents undercut franchised dealers to gain market share, but after a “honeymoon period” of 12-18 months, prices will start to rise.

“The way the European Commission has evolved block exemption is going to cost a lot of jobs,” says Cooke. “It would have been better to separate the issues and focus on the servicing side first – this is where the true price rip-offs occur. But it was a political decision to look at sales first because it's the glamour side.”

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