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The big picture: Location clause creates options

Do the carmakers have a plan when it comes to the Location Clause, which gets scrapped at the end of next month? Dealers across franchises still do not know what the standards will be regarding the opening of secondary sales points.

These outlets could simply be handover points or displays in supermarket foyers (Lookers trialled this concept with three Morrisons superstore outlets, but abandoned it last year), and dealers are looking at various ideas, such as mobile showrooms and, in some cases, replacing expensive showrooms with delivery points.

That’s partly the problem for carmakers – there are countless permutations for dealers and it’s unlikely that many of them will have a written standard until the dealer contacts the carmaker with their suggestions.

Delivery points are the most obvious extension post Location Clause. They could work well in high cost city areas such as London, where many dealers are losing money, or in rural areas that do not justify a full-scale showroom.

Dealers could downgrade existing dealerships, or fill open points with handover facilities rather than showrooms. That’s making carmakers nervous.

One development the end of Location Clause will not prompt is dealers opening showrooms adjacent to existing franchises in order to force them out of business, and that’s for two reasons.

An unwritten ‘gentleman’s agreement’ seems to be stopping groups from these types of aggressive moves against their peers, while few are willing to make any move without the carmaker’s approval.

One carmaker exempt from the rule changes is Suzuki. It opted for exclusive distribution, rather than selective, under the revised Block Exemption, which means it retains a restricted territory set up. Also exempt are carmakers with less than 5% market share, including Porsche, ChryslerJeep and Proton.

But brand groups, like Ford’s PAG marques or VW Group’s Volkswagen, Audi, Skoda, Seat and Bentley, are clumped together and are affected.

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