Approved car finance uk

The first thing that should be taken into account when looking at the impact of the revised block exemption regulations is that, despite the protestations of Steven Byers, the regulations do not set out to achieve price harmonisation for motor vehicles across Europe.

What, however, is very clear is that the EU Commission (EC) wishes to see a more competitive and open distribution environment where the on cost from factory gate release to end user customer is reduced. These benefits would then be passed on to the customer in reduced purchase prices.

Much has been written and debated about the technical detail of the regulations so I want to avoid covering that ground again but instead focus on the impact and the opportunities that could arise.

It is important to recognise that any changes are likely to be evolutionary rather than revolutionary and, therefore, previously experienced barriers will still take some time to break down.

The most significant short-term opportunity must be that of exploiting the low pre-tax markets such as Denmark, Spain, Greece etc. As we are all aware this has been difficult in the past due to supply quotas, deliberate order delays, right-hand drive supplements and many other reasons that were allowed to flourish under the old system.

These should not exist now and a free supply should be available. However, a note of caution must be levelled here. Over the next five years or so, the EC intends to encourage all countries to move away from the special registration taxes that create these pre-tax price anomalies which would pave the way for price increases in these countries. Remove the unfairness of markets such as the UK subsidising them and potentially eradicate the price differential. (Perhaps this is a move towards price harmonisation but I will leave you to make up your own mind on this.)

Just as important will be the need to remain competitive in vehicle purchases generally and that will mean ensuring that your suppliers are actively working towards becoming a low cost provider. After all, as volume fleet buyers, we do not need to be paying towards the cost of expensive showrooms and selling facilities. We know what we want and need, and we need it supplied efficiently and at the lowest price for the level of service required.

Compared to today, tomorrow's low-cost providers will probably be multi-marque selling from the same site, will be using fully electronic communication and will evolve from today's franchised network. I don't believe they will come from the dot com environment or that the current internet re-sellers will grow substantially beyond where they are now.

This is probably the area where the most significant long-term change to the market will take place. Without doubt, the new regulations will create the opportunity for a more comprehensive and competitive after-sales market while retaining the standards of quality and safety we all need.

The successful fleet after-sales/service providers of the future will be organisations that are fully utilising the facilities by being multi-brand approved agents sweating their assets by ensuring they retain maximum business from their local vehicle parc. And they'll be those companies that are also able to access OE quality parts direct from the component manufacturers.

There is, I believe, a misconception that these `new look' service agents will emerge from questionable back street garages. That is most unlikely. They are, however, more likely to emerge from current franchised dealers prepared to think outside their particular box and fully utilise existing investments and from the small number of reputable independents already providing good quality service for particular brands, albeit outside the franchised network.

As well as forcing a more competitive market, the changes are also likely to give the end user driver a greater choice of service agent. As the number of franchised outlets declines further, the distances that customers have to travel are increasing and this has brought along unnecessary overheads, such as courtesy cars, that are more than often used only to travel from the garage to the office where they then sit idle all day.

I'm sure that most customers would prefer to have a service agent much closer to office or home, and not need to have the added customer service of a courtesy car. I know that I, for one, most certainly would.

If this also meant lower cost, I think most people would probably be inclined to agree.

Should fleet managers worry about block exemption?

Clive Forsythe, managing director of fleet management specialist KeyFleets, examines what we can expect from the revised block exemption rules

The motor industry is still assessing the potential impact of the changes to block exemption regulations, which cover the way vehicles are sold, distributed and serviced in the UK. Predominantly, the amended rules were meant to benefit the man or woman in the street--any potential effects on corporate fleets were not really considered.

For many years, vehicle manufacturers in Britain were spared from normal European competition rules, thanks to block exemption. In practice, this meant that manufacturers could hand-pick dealerships and limit their number, while ensuring that only their vehicles were sold on the forecourts. Furthermore, franchised dealers were obliged to offer customers after-sales, service and repair facilities in addition to providing new cars.

However, the amended rules are altering this situation. The changes are designed to make the motor industry more competitive by creating an environment that will encourage competition in distribution, sales and servicing. The industry will have one full year to adjust, as the revised regulations came into effect on 1 October 2002 and will run alongside the existing system until 1 October 2003.

One of the major changes will see the separation of vehicle distribution from the after-sales service. Franchised dealers can still service the cars they sell. Alternatively, they can choose not to invest in a service and repair workshop and instead simply subcontract these requirements to a third party, such as an approved service agent.

This change means that vehicle manufacturers will still be under pressure to ensure that standards remain high. Having access to a cost-effective and efficiently managed SMR (service, maintenance and repair) network will be of paramount importance as this particular sector of the motor industry continues to evolve.

One other point is worth making here. Under the revised regulations, technical information will be made available to all types of service outlet at the same time and more quickly than ever before. Therefore, independent garages that apply to become authorised servicing points can be confident that the information they require to work competently and safely is readily available.

Existing franchisees will have the option of supplying more than one brand of vehicle, which may lead to the creation of multi-brand dealerships. In theory, the market could also be further opened up to other retailers and entrepreneurs, such as supermarkets and internet companies, which will not have to worry about the cost of providing servicing and parts.

Despite the headlines about widespread changes occurring in the wake of the block exemption changes, it really is too early to form satisfactory conclusions about the future format of the UK motor, retail and servicing industries.

For fleets, it is possible to discern a few broad trends. Most notably, in the medium term, we may see more fleet managers purchasing vehicles from one supplier and using another to handle all servicing needs. Clearly this will increase the overall administrative burden and cost of running a vehicle fleet. It may be the case that the fleet manager needs to negotiate with two separate suppliers for the purchase and maintenance of each individual vehicle. This, of course, will serve to diminish whatever buying power had been built up at a local level.

What remains clear is that vehicle management solution providers will continue to be in the best position to meet all such requirements, regardless of how the distribution network is eventually comprised. The key to keeping fleet costs down is to always explore the options that are available and to regularly review a company's existing methods of vehicle supply, finance, servicing and fuelling.

The fleet management industry is still in a prime position to ensure that their customers benefit from the most attractive deals, irrespective of the distribution network, and it is up to fleet decision makers to take advantage of this fact.

John Lewis is director general of the British Vehicle Rental & Leasing Association