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Tough competition in the aftersales sector ahead for franchised dealers

Franchised dealers will face even greater competition from independent repairers following the decision by the European Commission that helps independents target newer cars.

Regulation 461/2010 ensures that independent garages should be able to get better access to technical information from vehicle manufacturers and that independents and franchised workshops can get supplies of aftermarket spare parts.

Manufacturers whose market share on the repair and maintenance markets exceeds 30% will cease to benefit from exemptions under the EU's competition rules.

"This in turn will make it easier to deal directly with refusals to release technical information or the misuse of warranty terms aimed at excluding independent repairers," said the Commission.

The Commission’s concern is that if the cost of service and repairs remains high, with not enough competition for business between franchised repairers and independents, then some maintenance would be delayed with adverse affects on vehicle safety and emissions.

The Block Exemption regulation 1400/2002 expired at the end of May. However the Commission wants new car sales to continue to benefit from exemption on certain competition rules in order to simplify administration and reduce compliance costs.

Car distribution and sales will be covered by BE until June 1 2013, after which it will fall under a general exemption.

However the Commission took a specific approach for multi-brand dealers.

"If the widespread use of single-branding obligations leads to competing brands being shut out from the market, the competition authorities may withdraw the benefit of the block exemption for individual car manufacturers," it said.

To ensure the distribution of smaller brands, it introduced safeguards, such as guarantees that dealers can terminate the ties with manufacturers after five years.

CECRA, the European group representing dealers and repairers, was sceptical. It said the new rules "are not that different from what we have today".

It conceded they clarified what manufacturers could not do to protect their repair markets, but said the sales rules from 2013 were “not good news as they give more freedom to carmakers on the management of their dealer network”.

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