Office of Fair Trading made a research
Car makers might not be cheating, but Britain's new-car prices are still too high, according to an investigation by the Office of Fair Trading.The OFT has investigated the fleet sales practices of Ford, Vauxhall and Peugeot, after complaints made by the Consumers' Association and the National Franchised Dealer Association (NFDA). Under the terms of the Supply of New Cars Order introduced by then DTi minister Stephen Byers in September 2000, car makers cannot discriminate between fleet and car dealers in the terms of supply of similar volumes of cars.The OFT cleared all three car makers of such discrimination, but is concerned that there are still unexplained price differentials between Britain and certain European countries that the Supply of New Cars Order was supposed to diminish. Although British new car prices have fallen by about 10 per cent since March 1999, the OFT believes the price gap between Britain and parts of Europe should have fallen more, given exchange rate movements.John Vickers, director general of the OFT, says: "We believe major changes are necessary to the EC block exemption to ensure the UK market for new cars works better for consumers."The car industry's block exemption from EU distribution regulations comes to an end this September and the system is under review by the EU. The OFT's proposed reforms include greater transparency in the selection of new car dealers and the abolition of exclusive sales territories, with dealers being permitted to sell more than one make. It also believes that car makers should allow independent garages access to training, parts and equipment so they can compete for servicing work.The Retail Motor Industry Federation, whose National Franchised Dealers Association made one of the original complaints, said it was disappointed at the outcome of the OFT investigation. The RMI's franchised dealer director, Alan Pulham, feels the Order was flawed in several ways: the way it was introduced gave car makers time to restructure their long-term contracts with fleet customers, which would then not be part of the new system, and also the Order didn't seem to be delivering equality of deals in practice. "The Order was wishy-washy in the crafting," says Pulham.He also feels it is inappropriate for the OFT to be discussing block exemption when we are still awaiting the release of the draft proposals (due on February 5). "We are particularly concerned by the OFT's statement about the review of block exemption regulations at this crucial time, when the European Commission is drafting its new policy before consulation with all parties," he says.