PARIS -- Consumers are not getting cheaper cars and better service 18 months after the European Commission imposed new rules to foster competition, a new study says.
"The new EU rules appear to have had a disappointing start," said Jacques Lesieur, a Paris-based partner at consultant Pricewaterhouse Coopers who oversaw the study released today (May 16). "They have had zero effect for the client so far."
By implementing new block exemption rules in October 2003, the Commission sought to loosen the automakers' grip on sales and service and promote greater competition.
Retailers from outside the auto industry -- such as Virgin of the UK or Germany's Quelle -- have not made a mark, PwC says. Retailers entering the sector must master six distinct businesses -- new cars, used cars, spare parts, service, bodywork and financing -- Lesieur said.
Nor has multibrand car retailing spread, the PwC study finds. Very few dealers sell several brands under one roof rather than in separate showrooms. "They fear the response of the carmakers that supply them," Lesieur said.
Kroymans an exception
One exception is Dutch-based dealer group Kroymans Corp. Company CEO Ton van Soest said some dealers are confused by their new freedom after years of being dictated to by carmakers. Multibrand dealerships are a key to Kroymans' planned growth in Germany.
Brussels gave dealers the option to split sales and repair operations, but few did, PwC says. Of EU dealers with sales and service, only 3 percent stopped repairing cars.
The study says suppliers are not seriously challenging automakers' control over selling parts to repairers, a lucrative business. An exception is a chain of independent service centers run by Autodistribution France, Robert Bosch, Delphi and Valeo.
However, carmakers have cut parts prices, extended warranty periods and improved repairer services, such as delivering parts overnight.
But PwC says customers have less choice in sales and service because automakers have restructured networks. Between 2002 and 2004, the number of franchised dealers fell by 17,260 or 19 percent to 74,141.
Despite this, Lesieur insists EU reform is not a failure. Younger buyers will use new retail methods such as the Internet. He said: "We will see its effects in a few years as the impact of the reform filters through."