Tuesday, May 27, 2008
Car dealers stand to lose control if BER is dropped
Question mark over EU rules as industry considers de-regulation
Car dealers in the UK could be thrown into disarray if the EU decides not to renew the Block Exemption Regulations in 2010. The likelihood of the rules being abandoned are gaining credence with Sid Hopper, automotive partner at BDO Stoy Hayward, the accountancy firm, warning tah some dealers may start to feel exposed.
“A number of dealers fear that the 2010 BER might be totally removed, altering the balance of power between manufacturer and dealer,” he said. “This is a real threat to dealers who do not find favour with the manufacturers.” He said prices charged to car buyers were the main criteria being used by European lawmakers and they considered the impact on dealers of abandoning the BER as largely irrelevant. Hopper predicted that some big dealer groups will be forced to reduce regional representation of certain brands, and weaker players will be weeded out.
“Basically the EU wants to deregulate competition law -- in other industries manufacturers are able to control their distribution networks.”
He believes post-2010 car retailing could follow a similar pattern, which would mean carmakers holding more sway over who sold their products and how. Professor Peter Cooke, Buckingham University’s professor of automotive management, also believes the BER are on borrowed time.
“Manufacturers have always found ways of re-tightening the screws. I wonder if Brussels is fed up with that and is just going to say ‘enough is enough,’” he said. But RMIF NFDA director Sue Robinson insisted that despite draft papers being published this Wednesday, negotiations would continue. “The stable door isn’t closed. There is room for us to come back with submissions. The lobbying isn’t finished by a long chalk,” she said. If car retailing is de-regulated, Hopper warned manufacturers against loading dealers with fixed costs.
“When private groups and plcs make decisions to invest they look at manufacturers with good reputations, strong product ranges and good returns. Too much cost is unviable,” he said.
Hopper suggested that efficiently run smaller operations could benefit from picking up business in open points created by carmakers ditching existing dealers.
DATED: 27.05.08
FEED: MT
Car dealers in the UK could be thrown into disarray if the EU decides not to renew the Block Exemption Regulations in 2010. The likelihood of the rules being abandoned are gaining credence with Sid Hopper, automotive partner at BDO Stoy Hayward, the accountancy firm, warning tah some dealers may start to feel exposed.
“A number of dealers fear that the 2010 BER might be totally removed, altering the balance of power between manufacturer and dealer,” he said. “This is a real threat to dealers who do not find favour with the manufacturers.” He said prices charged to car buyers were the main criteria being used by European lawmakers and they considered the impact on dealers of abandoning the BER as largely irrelevant. Hopper predicted that some big dealer groups will be forced to reduce regional representation of certain brands, and weaker players will be weeded out.
“Basically the EU wants to deregulate competition law -- in other industries manufacturers are able to control their distribution networks.”
He believes post-2010 car retailing could follow a similar pattern, which would mean carmakers holding more sway over who sold their products and how. Professor Peter Cooke, Buckingham University’s professor of automotive management, also believes the BER are on borrowed time.
“Manufacturers have always found ways of re-tightening the screws. I wonder if Brussels is fed up with that and is just going to say ‘enough is enough,’” he said. But RMIF NFDA director Sue Robinson insisted that despite draft papers being published this Wednesday, negotiations would continue. “The stable door isn’t closed. There is room for us to come back with submissions. The lobbying isn’t finished by a long chalk,” she said. If car retailing is de-regulated, Hopper warned manufacturers against loading dealers with fixed costs.
“When private groups and plcs make decisions to invest they look at manufacturers with good reputations, strong product ranges and good returns. Too much cost is unviable,” he said.
Hopper suggested that efficiently run smaller operations could benefit from picking up business in open points created by carmakers ditching existing dealers.
DATED: 27.05.08
FEED: MT
