BRUSSELS - Carmakers and dealers have intensified their campaign to persuade the European Commission to preserve their special exemption from competition rules.
In May, European Competition Commissioner Mario Monti issued a warning that carmakers and dealers could lose their cherished block exemption that allows them to control their distribution networks in Europe.
Monti accused carmakers of 'misconduct' and abuse of European competition rules.
But the auto industry decided to fight back and take a more proactive approach to the block exemption issue.
Two weeks ago, representatives of the European dealer and manufacturer associations gathered together here to say the traditional distribution system is still the best way to sell cars.
They issued a position paper they hope can help persuade Monti to leave the major components of block exemption intact.
Monti is due to issue a study on the effectiveness of block exemption later this year, followed by proposals for changing the competition rules.
Block exemption expires in September 2002 and the auto industry wants to know as soon as possible what - if any - those new rules will be.
Despite the severity of Monti's remarks in May, industry representatives still believe they can work with him. Said Wolfgang Schneider, vice president of legal, governmental and environmental affairs for Ford of Europe: 'We're fully confident Commissioner Monti will do the right thing.'
The auto industry is convinced Monti's remarks were a call for them to mount a reasoned defense of block exemption. The position paper is a response to that call.
'The franchised dealer system is a fundamentally sound system,' said Fiat Auto Managing Director Paolo Cantarella, who is also president of ACEA, the European carmakers' association. 'It has served consumers, other stakeholders and society at large for many decades and it will continue to do so. Provided it evolves to meet changing customer needs, we do not think there is a better system.'
David Evans, president of the European Council for Motor Trades and Repairs, admitted the existing distribution system does have imperfections.
'We'll be working on those imperfections to be sure they're reduced to an absolute minimum,' he said.
But Evans said it was a good sign that dealers and carmakers, who are often at odds, are joining together on this important issue.
The position paper repeated warnings about the dangers of a 'free-for-all' system where supermarkets and other retailers would be free to sell cars.
Such a system, the position paper warns, would result in supermarkets selling only popular models and not an entire line of vehicles.
The automobile is a unique and complex product that requires special equipment and training to be sold and serviced properly, the paper claims. Franchised dealers, who concentrate on one brand, are best equipped to provide that, it says.
The paper points out there are major changes taking place in the system: e-commerce being the most dramatic example.
The paper also says: 'Contrary to popular belief, price differences for cars are among the lowest compared to other products and services in Europe.'
The auto industry is preparing itself for more bad news on the competition front. Volkswagen has already been fined E90 million for trying to prevent cross-border sales of vehicles. DaimlerChrysler, PSA, Renault and Opel are also being investigated. More fines could be handed out before the end of the year.
The block exemption debate has put carmakers in the awkward position of not knowing exactly how their cars will be sold after September 2002.
Hanns Glatz, delegate to the DaimlerChrysler board of management on European affairs, said: 'I don't believe we'll lose everything. What we can't exclude is the condition where some elements might be exempted. It's extremely difficult to plan for anything meaningful. Cleverly, they have passed the buck to us and said, `It is your turn to demonstrate why you need it.' '