European Commission to get tough with car manufacturers?

Since 2010, most vehicle manufacturers in Europe have been reluctant to engage on the topic of a meaningful and binding industry code of good conduct designed to foster clearer and fairer relations between dealers and manufacturers, says the NFDA (National Franchised Dealers Association).

This position has been adopted by the manufacturer body, ACEA, despite consistent lobbying on the part of dealer representative bodies such as the NFDA, ECD (European Car Dealers – a Division of CECRA) and support from the European Parliament.

The significant degree of unfairness experienced by dealers at the hands of manufacturers (ranging from arbitrary terminations to onerous standards) was highlighted in two European Commission consultations in 2011 and 2013 and as part of the NFDA market study conducted in 2012, which polled approximately 1,000 dealership sites in the UK.

As a complement to its work on unfair practices, around 12 months ago the NFDA drafted and, in conjunction with ECD, presented a series of proposals for an industry code of conduct to the relevant department within the Commission (DG Enterprise) as part of the ongoing CARS2020 project. The Commission encouraged manufacturers to consider these proposals.

In the face of continued resistance on the part of manufacturers to progress this option over the last 18 months, the Commission announced yesterday that unless an acceptable code can be agreed, it intends to initiate a legally binding solution, which could feasibly take the form of a new sector-specific regulation, intended to improve dealer manufacturer relations.

NFDA Director, Sue Robinson, comments “This is an important first step in bridging the harmful gaps left by the removal of the sector-specific block exemption.”

The Commission’s commitment to a achieving a concrete solution is set out in a final report of the relevant CARS2020 Sherpa Group, which describes key strategic objectives for the sector. The report will be published in due course and should form a basis upon which solid measures designed to improve the balance in dealer/manufacturer relations can be developed.

Robinson continues “We still have a long way to go, but this is a good sign. The clear message from the EU is that manufacturer intransigence is not an option. The NFDA is continuing to lobby on key fronts and, thanks to our members’ support and that of our colleagues in Europe, a solution designed to support more predictable, clearer and equitable arrangements for dealers is very much becoming a question of “when” not “if”. However, we need to keep this momentum going, particularly in view of the impending European Parliamentary elections. We have already written to all UK MEP candidates to brief them and enlist their support (which we intend to follow up in meetings with them post-election where possible).” The NFDA welcomes the Commission’s stance on this issue. When markets are more buoyant, as they are now, the issue of unfairness in dealer/manufacturer relations may appear less acute; however, the outcome of this initiative should, as well as helping dealers grow in better times, support more predictable and transparent relationships when markets become more challenging.