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AM special report: Impact of new Block Exemption rules examined

Four industry experts examine the implications of new Block Exemption rules to franchised dealers in a new white paper from AM.

The white paper is available free by clicking here.

The experts are (with a sample of their comments):

Paul Burrows, principal, Grant Thornton Automotive Services

"An under-performing dealer, or one with an unclear future, will now face even greater pressure to improve, to hit targets and to comply with standards – and be in a weaker position if the NSC believes they have no future in the network. In the current economic climate, every profitable unit and part sold is important – but not delivered at such an enormous cost as to make that completely untenable."

Dr Andrew Tongue, director, International Car Distribution Programme

"The outgoing Block Exemption rules explicitly protected dealers and steered manufacturer behaviour in a number of areas; the new ones are much less prescriptive and as a result hand franchise power back to the manufacturers to determine questions such as the degree of brand-exclusivity at their dealerships for themselves."

Miles Trower, partner at national law firm TLT

"Certain manufacturers may, of course, use the opportunity of Block Exemption reform and new agreements to extend their reach into other areas of dealer activity, which are not core to new vehicle sales.

"Although this may seem attractive to certain manufacturers looking to realise new revenue streams, in a market where margins are already thin, cannibalising those areas of a dealer's business that help them survive not only survive not only undermines the manufacturer/dealer relationship, but can also make a difficult trading situation much worse."

Sue Robinson, director - RMI National Franchised Dealer Association

"A European Franchised Code would be of long-term benefit for the motor retail sector. It would lay down obligations both for dealers and manufacturers, but would ensure dealers had the flexibility to run their own businesses without undue interference, allowing dealers to respond to market demands and ensure consumers get the best deal."

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