Major plans which could drive down the price of cars for British buyers are being unveiled by the European commission today. They could lead to a cut in car prices and the introduction of supermarket-style showrooms, with customers free to browse among different makes under one roof.
After years of consultation and negotiations with car makers, Brussels is ready to pass judgement on long-established exclusive dealership rights which have been blamed for keeping prices high in Britain.
The current concessions for the European car market allow car makers to maintain one-marque-only showrooms, to fix prices for different EU markets and to oblige car buyers to stick to in-house service centres and warranty provisions.
Technically, such arrangements breach EU rules on free competition, but the commission has so far permitted them due to the highly specialised nature of cars, which, says the industry, require special sales and after-care service and should not be treated like any other consumer product.
However, the so-called "block exemption" from EU rules expires in October, and consumer groups intend to oppose its renewal, saying that car manufacturers use the system to prop up prices and restrict competition in different markets.
Regular EU surveys have confirmed that many cars are still more expensive in Britain than anywhere else in the EU - sometimes costing half as much again as identical models in continental markets. Yet UK buyers looking for cheaper deals on the continent complain of obstacles from dealers abroad who are unwilling to sell right-hand drive models to British bargain-hunters.
Competition commissioner Mario Monti has warned repeatedly that exclusive dealership and distribution networks are in doubt unless unjustifiable price gaps between national car markets in the EU are closed. But Mr Monti is unlikely to scrap the system altogether and expose the car market to the cold winds of open competition. Instead he is expected to opt for a compromise arrangement, limiting car makers' rights to insist that their distributors in one EU territory do not "trespass" on another sales patch.
BEUC, the European Consumers' Union, an umbrella body which includes the Consumers' Association, wants the current system banished altogether, arguing that future car distribution should be market-driven, and not shaped by regulations.
But the car manufacturers are determined to fight to prevent a supermarket-style car market, warning that specialist after-sales care cannot be guaranteed if independent car distributors are allowed to buy new vehicles from makers or from their official distribution networks - what the commission calls the "free-for-all" scenario.
