Big test looms for new EU car sale rules
BRUSSELS, July 8 Reuters reported that the new rules governing car sales that mark a giant change for European auto consumers face their big test next week when Competition Commissioner Mario Monti presents his proposal to the European Commission.
Monti's supporters predict success for the rules aimed at opening up the car market to more competition. They cite an environment where pre-tax differences in car prices vary as much as 50 percent from one country to another.
As he put the finishing touches to his plan, Monti gave a nod to such powerful opponents as Germany and France, agreeing to delay until October 1, 2004, the effective date for a controversial clause permitting car dealers to open showrooms anywhere in Europe.
Starting in 2004, Monti's plan is to abolish the current exemption -- the so-called "location clause" -- from the principle of EU free trade which allows the car industry to impose geographical restrictions on dealers.
The remainder of the new rules will take effect this October 1, with a one-year transition period.
The new car sales rules ran into rough waters because of lobbying by the automobile industry, particularly in the big car-producing states of France, Germany, Italy and Spain.
The car makers group, ACEA, believes the proposals go far enough without removing the location clause.
"We don't believe the withdrawal of the location clause is needed," said Ivan Hodac, secretary general of ACEA. "We believe that the services of the Commission should take the view of the European Parliament, of a majority of member states and of the Ecosoc Committee into consideration."
STRONG OPPOSITION
At a recent meeting of an EU advisory committee, Monti won support from a bare majority of the 15 member states in favour of his proposal. He was opposed by seven countries.
The European Parliament passed a measure in May that advised the Commission to delay some of the most controversial parts of his proposal and re-write others.
Ecosoc represents the views in this case of the employers' group Economic and Social Committee of the EU. It opposes removal of the location clause.
Commission officials said on Monday they had incorporated about half the suggestions of the Parliament.
The changes include such minor adjustments as requiring that automobile dealers who do not do their own maintenance must inform customers in writing where they can get their cars tuned up.
But on the biggest change, the Commission split the difference. The Parliament had asked for a delay in the location clause until 2005, and insisted it should be reviewed one additional time before taking effect. Monti set his compromise date and rejected the additional review.
The new rules became necessary because the current ones expire at the end of September. Carmakers such as General Motors , Volkswagen (XETRA:VOWG.DE - News), Renault (Paris:RENA.PA - News) and Peugeot Citroen (Paris:PEUP.PA - News) argued that no radical changes were needed.
The rules liberalise car repairs with the aim of increasing competition in that area and are supposed to encourage supermarket and Internet sales.
Car makers who want to keep control of the locations of their car dealers must permit them to re-distribute through supermarkets and the Internet.
Most auto makers are not expected to choose that option, Commission officials said, but instead are likely to agree to abolition of restrictions on dealer location.
