Case Study

Note on the European car retailing and servicing industry

22 pages
November 2003
Reference: IMD-5-0611

Starting in 1992, European regulators turned their attention to car retailing. According to the EU, the intra-European market for car retailing and servicing was not really functioning. In spite of repeated complaints and heavy fines levied against some manufacturers, price harmonization was not any closer. But all this was going to change. Starting in October 2002, the “block exemption,” protecting car manufacturers from anti-trust laws, was going to be lifted. At last, car retailing could function properly. Car companies lobbied heavily against the changes, but without success. Under the new system, dealers could carry multiple brands and many other restrictions were removed. The possible implications were far-reaching. This note tackles car retailing and deregulation from different angles. Participants will learn about the car companies’ perspective, the difficulties of dealers to operate profitably and the actual decision-making process of customers. The note then explains in great detail the proposed changes, possible scenarios and how different car companies in the luxury, mass-market and import market are reacting to all of this.

Keywords
Deregulation, Block Exemption, Franchising, Channel Conflict, Margin Structure, Automotive
Settings
Europe
Services
2002-2003
Type
Published Sources
Copyright
© 2003
Available Languages
English
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