Selling and servicing cars after Block Exemption – what it means
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CHANGES to the way new cars are sold and serviced come into force this month but they are unlikely to herald the revolution that consumer groups want.
European legislation that governs the relationship between car manufacturers and dealers “the so-called Block Exemption“ has been overhauled.
Traditional dealer territories are abandoned and, in theory, many more independent garages should be able to apply for and be granted approved service centre recognition for the major brands.
Also, in theory at least, a dealer in Bournemouth could advertise and sell cars in Boston, Blackpool, Bristol or even Berlin and Bilbao while dealers in Lille or Lyon could operate in London or Leicester.
That's unlikely to happen, certainly for several years, just because of the impracticalities of covering such a vast area. "This is something we will see develop over many years" says car industry expert Professor Garel Rhys of the Cardiff Business School.
And we're also unlikely to see hundreds of independent, but approved, service centres open across the country because the cost of meeting any manufacturer's standards would be prohibitive to many smaller garages.
In fact, servicing costs could rise, says Professor Rhys. "Instead of being presented with greater choice, consumers may have to pay more at some independent garages because they have to pass on the cost of investment in new equipment."
There are three elements to the dealer agreement. One covers new vehicle sale; the second service and repair and the third covers spare parts.
"A dealer can 'apply' to take on one or more of these elements, but a dealer who has a new vehicle sales agreement is not obliged to take on servicing and repair activities" says Professor Martin Clarke of GMAP Consulting.
Similarly a dealer can apply to be a service and repairer with no other contractual conditions.
"Manufacturers cannot penalise dealers who do not take on a service and repair contract through restricting the supply of new vehicles or other punitive measures."
One of the major drivers behind the Block Exemption changes was the belief that it would lead to far more multi-franchise outlets.
That, says Professor Clarke, is unlikely to happen. Manufacturers will be very reluctant to encourage anything that dilutes the equity they have created in their brands.
"Although multi-franchising is allowed, our research suggests that many dealers will not want to fall out of favour with manufacturers."
That's because much of the goodwill in a dealer's business is contained in the franchise agreement which can be sold on to a prospective buyer.
But what might happen, says Professor Clarke, is the arrival of new entrants like banks and supermarkets.
"What we believe is a potentially attractive strategy for a new entrant is to open a relatively small national network of multi-franchised sales points backed up by a more extensive network of service and repair outlets."
Other research points to customers being prepared to drive up to an hour to buy a car, but nor more than 20 minutes to have it serviced. So we are also likely to see far more 'hub and spoke' set-ups with a main dealer, centrally located, operating a number of satellite service and repair centres.
One of the largest independent car servicing operations is Nationwide Autocentre which has 190 outlets in mainland UK. It is the country's largest MOT tester and services about 10,000 vehicles a week.
Until now, it has been necessary for all new cars to be serviced through the manufacturers' dealer network while under warranty. Car owners could now opt for the services of an independent garage as the tie between car dealers and after-sales service is set aside.
Nationwide Autocentre's managing director Tom Dunn said, "This is a massive step forward for the motor industry and a real turning point for independent garages such as ours. It's good news for consumers who will reap the financial benefits of greater freedom of choice without compromising the quality of work on offer".
While Nationwide is big enough to invest in the necessary specialist equipment required to meet current standards, smaller garage owners are likely to find the cost prohibitive.
Vcheck” for buyers of used cars, vans and motorbikes.
“Vcheck”, matches registration number and VIN number of a vehicle by checking the DVLA information. It then checks that it’s not stolen or written off by accessing the data from Association of British Insurers (ABI) and official Police (PITO) vehicle data across the UK.
Last year 497,630 were written off (source Vcheck ABI Category 1-4 insurance write-offs) and over 350,000 were stolen (source Vcheck PITO). Figures show that every 20 minutes an unsuspecting car buyer drives off having bought a stolen vehicle.
Before you buy it, Vcheck it! Vcheck costs only £19.95!
European legislation that governs the relationship between car manufacturers and dealers “the so-called Block Exemption“ has been overhauled.
Traditional dealer territories are abandoned and, in theory, many more independent garages should be able to apply for and be granted approved service centre recognition for the major brands.
Also, in theory at least, a dealer in Bournemouth could advertise and sell cars in Boston, Blackpool, Bristol or even Berlin and Bilbao while dealers in Lille or Lyon could operate in London or Leicester.
That's unlikely to happen, certainly for several years, just because of the impracticalities of covering such a vast area. "This is something we will see develop over many years" says car industry expert Professor Garel Rhys of the Cardiff Business School.
And we're also unlikely to see hundreds of independent, but approved, service centres open across the country because the cost of meeting any manufacturer's standards would be prohibitive to many smaller garages.
In fact, servicing costs could rise, says Professor Rhys. "Instead of being presented with greater choice, consumers may have to pay more at some independent garages because they have to pass on the cost of investment in new equipment."
There are three elements to the dealer agreement. One covers new vehicle sale; the second service and repair and the third covers spare parts.
"A dealer can 'apply' to take on one or more of these elements, but a dealer who has a new vehicle sales agreement is not obliged to take on servicing and repair activities" says Professor Martin Clarke of GMAP Consulting.
Similarly a dealer can apply to be a service and repairer with no other contractual conditions.
"Manufacturers cannot penalise dealers who do not take on a service and repair contract through restricting the supply of new vehicles or other punitive measures."
One of the major drivers behind the Block Exemption changes was the belief that it would lead to far more multi-franchise outlets.
That, says Professor Clarke, is unlikely to happen. Manufacturers will be very reluctant to encourage anything that dilutes the equity they have created in their brands.
"Although multi-franchising is allowed, our research suggests that many dealers will not want to fall out of favour with manufacturers."
That's because much of the goodwill in a dealer's business is contained in the franchise agreement which can be sold on to a prospective buyer.
But what might happen, says Professor Clarke, is the arrival of new entrants like banks and supermarkets.
"What we believe is a potentially attractive strategy for a new entrant is to open a relatively small national network of multi-franchised sales points backed up by a more extensive network of service and repair outlets."
Other research points to customers being prepared to drive up to an hour to buy a car, but nor more than 20 minutes to have it serviced. So we are also likely to see far more 'hub and spoke' set-ups with a main dealer, centrally located, operating a number of satellite service and repair centres.
One of the largest independent car servicing operations is Nationwide Autocentre which has 190 outlets in mainland UK. It is the country's largest MOT tester and services about 10,000 vehicles a week.
Until now, it has been necessary for all new cars to be serviced through the manufacturers' dealer network while under warranty. Car owners could now opt for the services of an independent garage as the tie between car dealers and after-sales service is set aside.
Nationwide Autocentre's managing director Tom Dunn said, "This is a massive step forward for the motor industry and a real turning point for independent garages such as ours. It's good news for consumers who will reap the financial benefits of greater freedom of choice without compromising the quality of work on offer".
While Nationwide is big enough to invest in the necessary specialist equipment required to meet current standards, smaller garage owners are likely to find the cost prohibitive.
Vcheck” for buyers of used cars, vans and motorbikes.
“Vcheck”, matches registration number and VIN number of a vehicle by checking the DVLA information. It then checks that it’s not stolen or written off by accessing the data from Association of British Insurers (ABI) and official Police (PITO) vehicle data across the UK.
Last year 497,630 were written off (source Vcheck ABI Category 1-4 insurance write-offs) and over 350,000 were stolen (source Vcheck PITO). Figures show that every 20 minutes an unsuspecting car buyer drives off having bought a stolen vehicle.
Before you buy it, Vcheck it! Vcheck costs only £19.95!
posted by Jon Fry at 11:11:00 AM
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