AM Online

Block Exemption in depth - dealers have not taken full advantage of multi-franchising

The European Commision's evaluation report has criticised the franchised dealer sector for not taking up opportunities to sell brands of competing manufacturers within the same showroom.

It hints that the provision in the current motor trade Block Exemption Regulation for multi-franchising could be redundant.

It states that in many instances, multi-brand selling is used in the same circumstances as it was before the current BER was adopted, such as in areas with lower population density, or in cases where one brand has such a tiny market share that multi-branding is necessary in order to allow the dealership to remain financially viable.

"It is clear that the main driver behind multi-brand sales has been external market developments," adds the report.

"It can be assumed that even in the absence of the relevant provisions in the regulation, many car manufacturers would conclude contracts allowing for multi-branding where it made commercial sense to do so."

The Commission also noted views that the BER may have led carmakers to set higher selection standards, driving dealers into larger brand-specific facilities and increasing distribution costs, in order to prevent anticipated weakening of their brand image.

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