Citroen has given in to demands of its European dealers outside France for open-ended contracts they consider more secure.
This move comes as automakers and dealers negotiate new contracts conforming to European Union new-car distribution rules. New contracts will become effective October 1 after a one-year transition period.
"Our dealers in France will have fixed-term contracts while everywhere else, dealers will have open-ended contracts," said Citroen Managing Director Claude Satinet. "I remain convinced that a five-year fixed contact was the best solution for dealers."
From October, manufacturers must give reasons in writing before terminating open-ended contracts. Fixed-term contracts require only six-month termination notice and no written explanation.
Foreign dealers, particularly in the UK, objected to Citroen's offer of five-year contracts. They argued that banks would be reluctant to lend money to dealers with franchise tenures that short.
Reacting to criticism about how automakers are implementing the new rules, Satinet said priority should be given to existing dealers rather than openly offering distribution rights to anyone.
According to a study by Renaud Bertin, a French lawyer specializing in distribution issues, not making a public offering puts would-be dealers at a disadvantage.
"Come the evening of September 30 [the end of the EU transition period], I'll know whether there are still slots available," Satinet responded.
Bertin also said Citroen should make public the criteria on which dealers are selected. Said Satinet: "Selection criteria are available for serious candidates."
In contrast, Peugeot is sticking to an 80-month, pan-EU contract that expires about the same time as the new block exemption rules.