Association, Inc.

Issue No. 1, 2007

JAMA responds to the June 2006 London Economics report on market developments in car retailing and after-sales markets

In June 2006 the technical consultancy London Economics published its report on "Developments in car retailing and after-sales markets under Regulation N° 1400/2002", undertaken at the request of the Directorate General responsible for competition issues in the European Commission.

The report examined market developments between 1997 and 2004 and particularly during the period following the entry into force of Regulation 1400/2002, which deals with the distribution of and after-sales services for new motor vehicles in the EU.  The report focussed specifically on the competition implications of the new rules for the distribution of new cars, for the car service-and-repair sector, and for the automotive spare parts market.  It covered developments in twelve Member States—Denmark, Germany, Estonia, Spain, France, Italy, Hungary, the Netherlands, Poland, Portugal, Sweden, and the United Kingdom.

As regards new car sales, JAMA fully supports the report’s main conclusion that the market for the sale of new cars is highly competitive, which benefits the consumer.  The report noted that inter-brand competition had increased over the period studied and that there was little or no foreclosure in the market for the distribution of cars.

Indeed, the report concluded that "Vehicle manufacturers compete actively for their market shares, and real prices show a slight downward trend. This is clearly to the benefit of consumers and appears to reflect the workings of strong competitive forces."  In this context, JAMA believes that any future proposed changes to the regulatory framework should take into account the already highly competitive nature of the market.

As regards the repair and maintenance sector and the distribution of spare parts, the London Economics report acknowledged that firm data for its study were very difficult to obtain.  For their part, JAMA members do not believe that there are competition concerns in either area.

The regulatory framework in which its members compete is extremely important to JAMA.  JAMA is committed to working with the Commission in support of a competitive market that meets customers' best interests, which include competitive prices and, above all, safe products and services.