Automakers Reduce the Number of Dealerships in Europe image

Automakers begin to close under performing dealerships and reduce dealers’ networks in markets where auto sales are falling dramatically.

Beginning with June 2013, the block exemption regime introduced in 2002 will be replaced with the EU’s general competition rules. The ending of the EU’s block exemption regulations for new-car sales also puts and end to the ‘safe harbor’ offered from normal competition rules. Nissan is one of these automakers’ which chose to reshape the number of their dealer networks before the change.

“We have used the opportunity to renew contracts in some markets and in other markets to issue blanket termination and give relief to dealers we want to keep,” said Paul Willcox, Nissan’s head of sales and marketing in Europe.

Frederic Banzet, head of Citroen, announced the automaker has already eliminated 5% of its dealers before the new rules, offering the rest of them new contracts with new terms. Recently, ICDP has noticed an increase in the number of dealers attracting franchises changing hands before June 1st, 2013.

Steve Young, managing director of UK-based dealer analysts ICDP, said the change in the rules “eliminates the right for the dealer to sell on his franchise, gives the manufacturer more right to terminate and also gives them the opportunity to ban multi-branding.”