Lack Of Action On ‘Unfair Practices’ Prompts Legislation Warning From EU

There’s been plenty of activity from our European colleagues, as the EU gives vehicle manufacturers new motivation to agree on a fair code of conduct.

The European Automobile Manufacturers’ Association (ACEA), along with most of the vehicle manufacturers it represents in Europe, has been reluctant to engage in the topic of a binding industry code of conduct to make the working conditions between Dealers and manufacturers fairer and less arbitrary.

Even despite continued lobbying on the part of Dealer representative bodies, including the National Franchised Dealers Association (NFDA), the request for a more transparent and equitable code has been largely disregarded for a reported 18 months.

This could be all set to change however, now that the European Commission has announced that unless an acceptable code is agreed upon, it will initiate a ‘legally binding solution’ – most probably in the form of sector-specific regulation.

Indeed, the Commission has been well aware of the less than ideal conditions Dealers have endured over the past few years.

In 2011 and 2013, two European Commission consultations highlighted the substantial unfairness experienced by Dealers, including arbitrary terminations and onerous standards handed down by manufacturers.
The Commission’s warning regarding legislation on unfair practice comes after a series of proposals drafted by NFDA, in conjunction with the European Car Dealers (ECD) – a division of CECRA, which put forth key suggestions for a revised code of conduct.

The proposals, which were presented over 12 months ago, were well-received by the Commission, which encouraged manufacturers to consider them.

In light of the Commission’s recent warning, NFDA Director, Sue Robinson said ‘This is an important first step in bridging the harmful gaps left by the removal of the sector-specific block exemption.’

She goes on to say that, ‘The clear message from the EU is that manufacturer intransigence is not an option. The NFDA is continuing to lobby on key fronts and thanks to our members’ support and that of our colleagues in Europe, a solution designed to support more predictable, clear and equitable arrangements for Dealers is very much becoming a question of when, not if.’

However, despite the momentum that’s finally being generated, the NFDA and its Director are under no illusion about the hard work that is ahead of them. As part of their strategy, they intend to leverage the European Parliamentary elections.

‘We have already written to all UK MEP candidates to brief them and enlist their support, which we intend to follow up in meetings with them post-election where possible’ said Robinson.

Amongst the new Code arrangements, the NFDA and ECD are seeking the freedom for Dealers to transfer ‘the sales contract’ to any member of the authorised network. Other changes include the freedom to sell different brands at one site as well as compensation for investments where termination of the sales contract has occurred by the manufacturer (and not caused by the Dealer).

The NFDA’s persistence in pursuing a new Code for the industry will not only provide protection for Dealers during challenging periods, but offer a more secure platform for growth during times of prosperity.
The AADA will closely follow the developments of this issue and provide updates in upcoming editions.

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