Garages fight off challenge from Europe

EU attempts to open up the car market are being resisted, says James Ruppert

This time next year, in theory, your car should be cheaper to buy and cheaper to service. That's because the motor industry will no longer be regarded as a special case, exempt from the normal principles of "fair" competition.

This time next year, in theory, your car should be cheaper to buy and cheaper to service. That's because the motor industry will no longer be regarded as a special case, exempt from the normal principles of "fair" competition.

In 1988 the European Commission exempted the motor industry as a "block" from the competition laws. As a result, the industry was allowed to operate outlets selling only one manufacturer's products. It was felt that single-marque dealers represented the only way in which cars could be safely sold and maintained.

Since last October, it has been possible to sell cars from different manufacturers under the same roof, at multi-franchise dealerships - which should mean easier comparisons on prices. Manufacturers can now sell their cars to direct suppliers such as car supermarkets - which could mean lower retail prices. There is no longer a requirement for dealers to offer servicing facilities; the whole after-sales market is being thrown open. Manufacturers cannot limit access to technical information; this means independent garages could offer cheaper services. In practice, though, the UK car industry looks much the same to me.

A survey by the International Car Distribution Programme has found that dealers are struggling to meet the requirements of manufacturers on sales, service and repair. So, rather than the control of manufacturers being reduced, they are actually wielding more power. Indeed, a parliamentary committee of MPs believes that tighter margins experienced in car sales are forcing dealers to recoup costs within servicing and repair. They concluded that authorised-repairer status, whereby a manufacturer authorises an independent garage to service its vehicles, had failed to provide any real alternative. The situation becomes even more depressing when you talk to the industry establishment.

The Retail Motor Industry Federation, which represents many garages, does not see a problem. I won't embarrass its spokesman, but he thought the 250 to 300 garages that had achieved authorised status were fine and, anyway, car servicing is becoming ever easier, as all they have to do is plug it into some diagnostic equipment. He may be right, but that does not answer the question as to whether the situation is getting better or worse for the car buyer and owner.

For large dealerships such as Reg Vardy, which currently has 95 car dealerships and sells up to 200,000 new and used cars every year, the ending of block exemption means that it will get even bigger. The chief executive, Sir Peter Vardy, says: "It represents a huge opportunity for Reg Vardy because it is opening up the market. Many independent retailers have viewed the cancellation of existing franchise agreements as a chance to sell up and retire, which means a lot of potential acquisitions are becoming available.

"For a company in a strong financial position and ready to grow, this is offering opportunities that are too good to be missed. Manufacturers want fewer partners, with bigger volumes, which is why we have seen consolidation and a reorganisation of manufacturers' representation."

Some companies, though, have approached the issue of a more open market by trying to make life easier for their customers. Unipart Automotive realised that there was a significant opportunity for its 1,480 Unipart Car Care Centres (UCCC) to become more involved in sourcing new and used cars for their customers. UCCC is a national network of independent, owner-operated garages, which have business support and marketing expertise from Unipart Automotive.

Each garage has, on average, 250 car-owning regular customers. This means that they look after some 400,000 cars in the UK, all of which will need to be replaced at some time. Many independent garages have suffered over the years by having their loyal customers, asking advice on what new or used car to buy, and where to buy it, and the garage being unable to help, other than to send the customer to a competitor. This is no longer the case for UCCCs, since Unipart joined forces with Dealdrive in putting together a web-based program to be used by the UCCCs to allow them to offer new and used cars at competitive prices.

To gain access to this new car purchase system, you go to www.uccc.co.uk to find your nearest UCCC, or go to www.dealdrive.co.uk. Ron Hall, the managing director of Dealdrive, says: "Allowing us to have the support of the Unipart Automotive brand gives immense confidence to the customer. There is also the additional promise of being able to choose to have the car serviced at competitive rates by a qualified independent garage."

Maybe it is early days for a truly transparent car industry, but the signs seem to be that instead of more competition, there is actually less. Manufacturers are more powerful and dealerships more complacent and protected than ever.