EU expected to open up European car market


The European Commission is to propose "bold changes" in car distribution throughout the EU designed "to put the consumer in the driver's seat", a Commission source has said.

The existing regime, which expires in September after 15 years, provides a block exemption that frees the entire auto industry from broad anti trust rules which ban price-fixing and the carving up of sales territories.

Merchandising has undergone major changes in the past 15 years in nearly all areas but auto distribution, the source said, and the new rules are designed to pave the way for new forms of auto distribution.

First, the new rules will prevent car makers from requiring that dealers sell only one brand, the source said.

Second, the new rules will permit retailers to specialise in either sales or after-sales service.

"The present regulation says that dealers must also provide after-sales service," said the source. "That is not normally what you see in a free market."

Also, dealers will be able to actively solicit new sales across Europe instead of merely in their own geographic area. Under existing rules, dealers are restricted from selling outside a particular city or region.

Given the new rules, sales through the Internet will be far more possible, the source said.

Car makers will continue to be able to choose dealers. But even if they refuse to choose Internet dealers there should be enough availability of cars to permit the new forms of sales.