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1. Block exemption is name given to a set of European rules
that define the way new vehicles are supplied throughout Europe.
2. Currently manufacturers supply new vehicles through selected
franchise dealers, where each dealer provides after-sales support
known as the sales servicing link
3. Each dealer acts as a local point of contact and a product
support centre
BLOCK EXEMPTION PROHIBITS
4. Manufacturers fixing retail prices, as dealers must be
free to offer consumers' discounts on a manufacturers list price.
5. Dealers must provide a full range of after-sales support services,
not just the most profitable ones.
PRICES FALL BUT BLOCK EXEMPTION RULES REMAIN UNCHANGED
6. UK car prices have been falling since 1999 according to
the Alliance and Leicester car price index, however block exemption
rules have remained the same, so if the distribution rules and
not changed, they cannot be the reason for rising or falling
prices in the UK
TAX AND CURRENCIES, DISTORT THE SINGLE EUROPEAN MARKET
7. Block exemption rules are the same in each EU member state,
unlike taxation and exchange rates. While these variables continue
to distort the single market pricing differences will continue.
IN AN UNREGULATED MARKET PRICES MAY NOT FALL
8. An Accenture report published in 2001 warned that removing
the right of manufacturers to select only high quality dealers
will bring neither benefits for competition nor lower prices
in the long term.
9. An unregulated market may lead to the emergence of mega retailers.
10. A few large outlets push smaller resellers and service centres
out of business.
SAFETY AND RECALLS
11. A local franchise is an important part of a successful
recall programme, as dealers are the first point of contact for
consumers.
12. Dealers also offer advice and carry out safety checks free
of charge.
WHAT DO CONSUMERS THINK?
13. In research conducted by Ipsos in 1999, consumers were
found to be aware of European price disparities.
14. Consumers also feel that the difference in prices between
Europe and the UK is due to taxes rather than the distribution
system
USED AND INDEPENDENT DEALERS
15. With an unregulated market and the likely emergence of
mega-dealers. Independent garages and used car dealerships may
struggle to compete.
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