BER 1400/2002 & economical crisis

CECRA’s statement

NBF Conference

Oslo, the 24th of March 2009

Charles de Marcilly

EU affairs Director

CECRA, Oslo, 24/03/091

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CECRA’s representativeness (1)

27 national trade associations in 23 EU and EFTA countries, representing the 350,000 automotive dealers, authorized and independent repairers

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CECRA’s representativeness (2)

14 European Dealer Councils representing the interests of authorized dealers and repairers of a particular brand

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CECRA’s representativeness (3)

In figures: 350,000 enterprises of which around 120,000 are authorized dealers and repairersand 260,000 independent repairers employ around 2.8 million people

In addition: • about 110,000 fuel businesses employing 440,000 people; and some 12,000 motorcycle businesses employing 81,000 people

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The talk of the town...

2009: uncertainty...

Economic

&

Legal

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Market outlook 2009

Passenger cars - Registrations – 7.8 % in 2008 (14.7m) - Sharpest decline since 1993 - 4th quarter – 19 % - 2009 forecast at least – 15 % - January ’09 registrations -30 % to – 40 % in ES, IT, UK

Commercial vehicles - Registrations – 9 % in 2008 (2.5 m) - 4th quarter – 24 % - 2009 forecast at least – 30 %

Similar developments around the world - Global car sales to fall to 50-55 m from 63 m in 2008 and 69 m in 2007

Figures’ sources: ACEA

Number of repairers should remain stable but what about dealers?

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Figures/statistics: illustration

Source: CECRA 2009

Number of authorized dealers      

Country 2005 2006 2007 2008 Tendencies

Finland 273 250 250 / Number will decrease with 5-10%

Slovakia 440456/49

8420/53

8 400/557 Estimation 2009: 402 dealers & 600 sales points

Italy 3866 3909 3893 / Number will decrease due to non-profitability

          and high standing costs

Belgium 2055 2001 2075 2139  

Sweden(+trucks)

1348 1343 1369 1327  

France 4638 5321 5472 /  

         

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Need of a tailor made approach

CECRA’s leitmotiv:If vehicles can no longer be adequately sold and repaired, why should they be manufactured?

Commission’s* observation on the crisis:Due to its (automotive branch) close links to other sectors and the wide spread of supply industry and vehicle trade, the negative economic effects reaches out to millions of employees in all Member States

*Commission IP/09/318

Interlinked but with specific needs

Vehicles sales

Repair &maintenance Parts

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Trends

Economic crisis, general comments...

From dealers side particular attention should be given to...

• All the measures modify deeply the market structure

• Development of the sales of “small cars”

• Increase of used car stocks

• Reducing of margins on new cars

• Credit to finance vehicle stock

• Delay of the impact on Trucks and commercial vehicles (long term investment)

CECRA, Oslo, 24/03/09

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Governement to rescue: scrapping schemes

Country Summary Details

Germany New Scrapping incentive scheme worth €2,500 for 2009 (could be extended)

France New “Super-bonus” scrapping incentive scheme worth extra €1,000 off new car

Italy Re-launch of €1,500 scrapping incentive scheme

U.K. Discussions concerning scrapping scheme

Spain Re-launch of Plan Vive, possible extension to captive finance companies

PolandRumour of new scrapping scheme with VAT (22%) deduction for new car buyers in exchange for scrapping their old car (exact details uncertain)

AustriaNew scrapping scheme announced for 2009 worth around €1,500 when scrapping a car over 13 years old

Romania €1,000 euro to purchase a car when scrapping a vehicle over 10 years

Portugal€1,000-1,250 euro for a car which emits less than 140 g/km CO2 when scrapping a vehcile over 10 years old

Belgium Belgium government close to agreeing a scrapping incentive scheme

Source: global insight

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Challenges (1)

Short term proposals

• Urgent decision to prolong BER 1400/2002

• Extension of incentives schemes to recent old cars & trucks

• Specific credit line to promote stock management could be assumed by a state guarantee

• Extension of the “lay off employment” supported by states to aftermarket

• Fiscal exoneration for professional taxation on investment

• Road taxes

• Interest deduction on consumer credits

CECRA, Oslo, 24/03/09

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Challenges (2)

Long term cycle, new priorities

• Fuel efficiency• Increasing safety and environmental standards • Balanced international trade • Remodelling of the financial and credit system• Which car in 2020? Hybrid, electric, bio fuels...? • Challenge of maintenance & parts • Anticipate the aims of anticompetitive behaviour due to new market organisation• Innovation in distribution formats and return to customer proximity

All those elements should be under control, so as to guarantee the essence of European economic competitiveness

CECRA, Oslo, 24/03/09

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BER 1400/2002

Expiry of MVBER 1400/2002

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Block exemption in practise (1)

Block Exemption Regulations = Safe harbours

Exemptions from the direct application of the General Competition law rules of

the EC Treaty

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Block exemption in practise (2)

2 types of Block Exemption Regulations

Sector-specificTailored solution for

a specific sector

Motor Vehicle BER (MV-BER 1400/2002)

GenericOne-size-fits-all for all sectors

Vertical Restraints BER (VR-BER 2790/1999)

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BER explanation

BER 1400/2002: “ Charter of the sector”

From dealers side (among others): Possibility of opening a secondary outlet Multi-branding is permitted Define contractual clauses:

• Arbitration rules • Transfer of businesses• Contractual duration• Justifying the termination of dealer and repairer agreements

For all operators competition increase for the benefits of the consumer

CECRA, Oslo, 24/03/09

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The Commission’s approach

Solution: Simplify!

MVBER has helped to protect competition…

…but certain sector-specific measures have not been effective,Other measures

may be duplicated elsewhere

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BER 1400/2002

Over the past years the Block Exemption Regulation 1400/2002:

Has led to better competition in the internal market,

Provided legal certainty and safety for the 350,000 involved SMEs, in particular with regard to the high investments that they have to undertake (year by year it represents an average of 500.000 € to 1.000.000 €). Legal certainty is absolutely essential during the current period of economic and financial crisis.

Is THE most comprehensive guide covering in detail all the requests concerning the sector (Guidelines, Q&A, Single answers to stakeholders etc.). Each structural modification of the existing rules would present new interpretations and would therefore bring extreme uncertainty and danger which sounds irresponsible especially knowing that the sector is facing a very difficult period.

Prolonged the Commission's twenty five years tradition of successful policy in regulating the sector. There is no convincing reason to abolish it.

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The scenarios for the future

Sector-specific instrument

Motor Vehicle BER (MV-BER)

1. Prolongation for few years of current MVBER 1400/2002

2. Modernised MVBER with/without Guidelines

OR Generic instrument

Vertical Restraints BER (VR-BER)

1. VR-BER alone

2. VRBER with Guidelines + code of conduct

27 Commissioners

EU Commission EU Parliament Council

785 Members 27 Members (ministers of EU Member States)

CECRA, Oslo, 24/03/09

Lobbying process

National+EU level

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The BER making process

StakeholdersNational

Competition AuthoritiesOpinion Opinion

European Commission

European Parliament Adoption by the

college of Commissioners

CouncilCouncil

OpinionOpin

ion

Proposal

CECRA, Oslo, 24/03/09 22

The need for a stakeholders’ Alliance

Body RepairersAuthorised and Independent RepairersGarage Equipment & Tools ProducersMotorist ConsumersIndependent Parts DistributorsEngine Rebuilders and Remanufacturers

AIRCCECRAEGEAFIAFIGIEFAFIRM

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et Off ice Secretary General:

c/o FIGIEFA Bd. de la Woluwe 42 bte 5 B-1200 Bruxelles / Belgium T +32 2 761 95 13 F +32 2 762 12 55 jl.basset@f irm-org.net

Off ice President: c/o VÖM Altmannsdorf er Str. 142 A-1230 Vienna / Austria T +43 1 8040494-0 F +43 1 8040494-20 lammel@f irm-org.net

INTERNATIONAL ASSOCIATION OF ENGINE REBUILDERS AND REMANUFACTURERS FEDERATION INTERNATIONALE DES RECTIFIEURS ET RECONSTRUCTEURS DE MOTEURS

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Thank you for your attention...

For further enquiries please contact:

Mr Charles de MARCILLYEuropean Public Affairs Director

T. +32 2 771 96 56M. +32 4 86 36 06 37

charles.de.marcilly@cecra.eu

www.cecra.eu

CECRA, Oslo, 24/03/09