Small, rural dealerships are at risk of being swept away in the changes to Block Exemption by the European Commission next year, reducing consumer choice as large retailers seize greater market share.

The latest edition of the 'GMAP European Distribution Handbook', produced by automotive consultancy HWB International and GMAP Consulting, warns that an EC driven by the desire to be seen as innovative in what has become a highly sensitive issue, particularly among UK consumers, could inadvertently make the situation worse for the car buyer.

The report's author Philip Wade said: “Most dealers are small, local businesses (average sales per main dealer outlet in Europe in 2000 was 275 new vehicles) unable to afford large investments in IT equipment and training.”

Web-based systems are overcoming this problem, but Mr Wade warns: “The EC faces a difficult task in framing a regulation that promotes innovation in car retailing yet does not inadvertently reduce choice of product, retail outlet or service provision. Most vulnerable to structural change are the rural communities likely to be ignored if the smaller dealers are swept away and the smaller brands unable to afford adequate representation in a world of large retailers focusing on best sellers.

“The lesson of unintended consequences should not be ignored by Brussels regulators.”

The report also accuses the commission of 'side-stepping' the issue of dealer protection. In the US dealers are protected by legislation limiting the conditions under which manufacturers can terminate contracts. “The UK is notable in giving virtually no right to compensation for contract termination,” Mr Wade says. (December 20, 2001)