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Dealers ‘struggle under weight’ of new laws

Dealers are struggling under the weight of new legislation governing sales, service and repair areas, according to the International Car Distribution Programme (ICDP) after a survey investigating the impact of new block exemption regulations on manufacturers and dealers.

The additional burdens on dealers, the research reveals, appear to stretch the spirit of the regulations by increasing manufacturer control over franchised networks rather than reducing it as the regulators had hoped.

The predicted outcome is that profits will suffer over the next few years, especially in the continental European markets.

John Whiteman, ICDP project director, said the full effects of block exemption are still to be felt. "The main effect so far has been to add admin, bureaucracy and additional costs that make life more difficult for everybody. It's a question of whether dealer groups, manufacturers and independents can see their way to taking the opportunities that have been created."

Whiteman predicts further wide-scale consolidation of dealer groups, but doesn't see this as the death of smaller businesses. "If the smaller groups get their business right I think they will thrive in the market."

The ICDP stated that manufacturers feel that they have not had to alter their overall strategy a great deal to adapt to the rules, but that enhanced competition from different sources will oblige them to continue to focus on efficiency and effectiveness in many areas of activity.

It also predicts increased pressure on margins and further dealer rationalization, but alongside it an opportunity for more efficient dealers to expand the scale of their operations at the expense of weaker ones.

34 dealers and 18 manufacturers and national sales companies across the EU took part in the survey.

  • More on the pressure dealers are facing in this week’s issue of AM.
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