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British consumers pay higher prices before taxes for cars than anyone else in the EU.
Automakers often charge less for cars in countries where the automobile is heavily taxed, such as Denmark and Greece.
The European Commissioner Mario Monti hopes that the bold and balanced reform aimed at injecting competition at all levels of distribution and car repairs benefit consumers and reduce the cost of new cars.
The new rules, which should reduce the price gap before tax for cars by consumers, angered both the automotive industry and politicians.
Consumer groups, however, support change - like the new generation of automobile supermarkets and online car dealers.
The new rules will replace the exemption for current category on motor vehicle distribution and maintenance agreements that protected the automotive industry competitive in the open market for two decades.
Exemption agreements expire on 30 September this year, although the automakers will not have to fully comply with new rules for another year.
Consumer groups have long argued that the exemption of the automotive industry of the European competition law has enabled a rigid system of national or regional dealers selected by vehicle manufacturers to develop.
This has deprived consumers of choice and restricts competition in the supply of new cars and after-sales service, according to analysts of the independent MFBI automotive industry.
British car buyers have been hit hard.
During the summer of 2001, the pre-tax price of a Fiat Marea, for example, was Ј9,197 UK over Ј5,752 Ј5,583 Greece and Denmark, the European Commission said.
In summer 2002, it became clear that the introduction of the euro, which introduced greater price transparency between countries of the EU had failed to bridge the price gap.
The situation of 1 May 2002 showed that no significant price convergence has yet taken place, the Commission said.
The pre-tax price of a Fiat Seicento was 63 higher in the UK it was in Spain.
In the UK, the Seicento costs 7,975 euros in Spain, it costs 4893 euros.
When, in May 2000, Mario Monti joined on the podium at the conference Forum Europe in Brussels, his message to the auto industry was clear.
M. Monti wants the consumer is in the driver's seat.
It should be the consumer is in the driver's seat, he said, before launching a frontal attack on the way the automotive sector has made its business.
Most motor vehicles are distributed in the same way, through exclusive and selective distributors who are subject to the same types of restrictions.
A restriction was the assumption that car dealers must also provide after-sales services.
In a market where the distribution is approximately 30 of the cost of a new car, the handful of automakers on the dealers and consumers is strong.
Brokers who are flatten the automakers go out of business.
The new entrants - such as car dealers web based or in supermarkets - are preparing to gain market share once the rules change.
In the jargon of the competition is tied selling, which is normally considered a serious restriction of competition, Mr Monti said, insisting that no technical reason seems to exist for such a link.
Another restriction is the assumption that the brand's specialists are needed for repair of complex modern cars ,.
M. Monti acknowledged that, indeed, specialists may be needed.
But he did not agree that they need to be dealers or service outlets belonging to the network of a manufacturer.
Under the new rules, car manufacturers will no longer be allowed to require a licensed mechanic also sells new cars, and manufacturers will not be allowed to limit the number of, or decide the location, authorized repairers.
Independent garages will have better and more equitable access to technical information, training, tools, repair shop equipment and original spare parts.
Consumers will have more freedom to choose between the parties and original parts by independent experts.
In fact, rather than being a free market, the European automotive sector has for years been dominated by a handful of automakers - and as such, it would be better described as an oligopoly, Mr Monti said .
To broaden consumer choice and purchase and repair of cheaper cars, M. Monti wants to allow car dealers to open showrooms where they want in the EU.
This change was accepted by the committee, but the clause will not be in effect until October 2005.
Selective where they can actively sell to consumers in one place and in all EU countries, but not to independent resellers.
Exclusive, where they are still assigned exclusive distribution areas, but they will also be free to sell to independent resellers and customers outside the region who contact them directly.
Be allowed to exhibit cars of different brands in the same showroom, but in separate sales areas.
Automakers will retain their right to choose dealers and to protect their brand image.
The Monti plans, which were announced in February, immediately aroused strong reactions.
In January, the Minister of the German economy, Werner Muller, wrote to M. Monti, criticizing its plans to change the way the automotive industry has been exempted from the European antitrust regulations.
The letter from M. Muller reflects the concerns expressed by the German car industry, which suffered in 2001 a decrease of 1.
Shortly after Mr Monti presented his proposal, German Chancellor Gerhard Schroeder warned that he would oppose some of the changes because he feared they might encourage job losses in the automotive industry .
The automotive industry is concerned that supermarkets shunt small car dealers in the market, dilute the integrity of the car brand and reduce the level of service for motorists.
In short, said the president of the European Automobile Manufacturers Association, Jean-Martin Folz, changes could disrupt a system that works well.
The British car industry is deeply opposed to Mr Monti to tinker with the lifeblood of the industry plans is already in a fragile state, the League of automakers and Traders SMMT chief executive Christopher Macgowan said.
Mr Macgowan said there was no evidence of a lack of consumer choice and insisted that prices are not influenced by the block exemption.
But consumer groups have welcomed the intervention of M. Monti.
Indeed, one of the reasons it has taken measures in the first place was a pile of 20,000 protest notes signed by consumers in the UK and addressed him by the Association of British consumers.
There are two years, the European Commission has found that British drivers paid an average of 10 too much for their cars.
The prices in the UK fell by about 5-10 last year, after the government ordered the industry to stop ripping off consumers.
Despite this, the cars cost more in the UK than anywhere else in the EU, reports the UK Office of Fair Trading said.
Automakers collective market power has allowed them to charge different prices for the same cars in the EU.
M. Monti spoke of consumers in EU countries with anger when cars were expensive - primarily the UK - travel to other states to buy cheaper cars.
Many drivers were unable to find a dealer willing to provide, M. Monti said.
Following the forthcoming reforms, M. Monti donors insist that the price differences within the euro area and the EU in general, will disappear as the euro increases price transparency and competition heats up.
In the Belgian city of Antwerp, the car dealer Cardoen Cars began to sell cars to 25 discount for buyers Colruyt supermarket in anticipation of the lifting of the block exemption.
Auto dealers online are also preparing ahead of market developments.
Consumers will no longer flog around many different dealers to do their research, so we think there is more choice, says car dealer Online Justin Skinner.
However, despite the approval of the new rules of the Commission, EU governments will have to approve the changes.
Industry analysts are not convinced that change is imminent.
Price convergence - if it happens - will occur at a relatively slow pace, said auto analyst Schroder Salomon Smith Barney, John Lawson.
The devil is in the details with these regulations we do not know how quickly they'll come, but I suspect her of at least two years, said Mr. Lawson.
Regarding the evolution of automotive markets, we suggest that there's not going to be large differences between major EU countries in 2002.
BBC NEWS Business European car market set for shakeup, Affairs, European, market, driving seat for consumption.