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Dealers wait for new rule details

Carmakers are going to the wire over announcing full details about post Location Clause contracts.

Many are in discussions with their dealer council members and individual retailers. A number say dealers are expressing an interest in additional outlets.

One senior industry source has told AM that BMW GB has completed market research into the potential advantages arising from the scrapping of Location Clause and intends to encourage dealers to open outlets in new areas. The carmaker denies the claims, however, which came from several of its franchised retailers.

David Taylor, BMW GB dealer development manager, says: “We have communicated to dealers our obligation of pointing out the opportunity under the fall of Location Clause. We have not conducted research in this matter.”

Taylor says it is imperative for BMW to retain competition between large and small dealer groups. “Like all our dealer retail standards, a uniform approach is being made with the European zone,” he adds.

From October 1, dealers will be entitled under EU Block Exemption to operate a sales or delivery point anywhere representing a franchise they already hold. They must, though, ensure the satellite or additional outlet conforms to the manufacturers’ ‘standards’.

A number of dealer bosses are expressing frustration over the reluctance of some carmakers to specify their rules on showroom size, fittings, etc. Council chairmen contacted by AM declined to discuss the issue publicly and said any statement would need to come from the manufacturer.

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Ford is in final discussions with its dealers and says some of them have indicated an intention to open satellites. The standards will be in place by October 1, says the company, but at least one issue has to be resolved.

The market leader’s policy about supplying cars to any satellites is part of the discussion with its dealers – an important one because of the cost implications.

“It would not be appropriate to discuss this until the final agreement with dealers is reached,” says a Ford spokesman.

Volkswagen has set its criteria, and informed its dealer council, but is “ambivalent” towards it, says a spokesman. “On one hand, it may increase customer choice but, on the other, it may affect retailer profitability.

“Should retailers open satellite locations, we will be able to increase supply, providing that we have the necessary production. None of our dealers has said they want to open a satellite.”

Citroën says some of its retailers are interested, though it is not in a position to name them yet. Cars will be delivered to the new distributor’s contract address.

Toyota GB has agreed with its retail network that satellite standards will be the same as at its existing centres, says Tony Whitehorn, Toyota and Lexus GB sales and aftersales operations director. None of its dealers has yet indicated a wish to open a site under the new rules, but Toyota “would be happy to go through the process with them”.

Nissan is preparing the business criteria for any applications “and will willingly work towards satisfying any applications that meet them”, says a spokesman.

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