Free trade in EU cars seen within 10 years spacey

European Union rules which restrict free trade in the car market and, it is claimed, lead to higher prices will be scrapped within a decade, according to the chairman of Britain's largest vehicle dealer.

The so-called block exemption, which allows car manufacturers to restrict sales to one dealer in a specific area, is being reviewed by the European Union. Retail groups and manufacturers are presenting their cases for the exemption, which is likely to continue in some form for another decade.

But Sir Trevor Chinn, chairman of Lex Service, told a conference: "I don't believe that block exemption will survive after the next extension. I don't think it's desirable but I think it will happen."

New block exemption arrangements would allow dealers to sell more than one type of car in separate premises under separate management and permit them to buy spare parts from sources other than the manufacturer. Both these changes are opposed by car makers.

Sir Trevor welcomed the stability a new exemption would bring but said the European car industry would face big changes anyway. "The changes to block exemption will play a part in this process of change but their effect will be less than the economic and customer pressures."

The car market in Europe was going to stay competitive due to over-capacity and non-European imports. The increased reliability of cars was cutting revenues from servicing.

Sir Trevor said the dealership structure was uneconomic and in Britain alone the number of car dealers would fall by around a third to deal with the changing market conditions. There would have to be more focus on customers, he added.

He said customers were prepared to travel longer distances to buy a car than they were to get it serviced.

"This leads to the logical conclusion that the dealer network should be structured with a smaller number of easily accessible car showrooms and a series of satellite service centres," Sir Trevor said.