New EU rules about selling cars will have a dramatic impact on the Irish industry. Donal Byrne reports from the forecourts
For Pat Doyle, the EU policy that's set to revolutionise the Irish motor industry is not just more bureaucratic red tape with little real impact.
Mr Doyle, a Peugeot dealer in Courtown, Co Wexford, saw how it would change the motor industry sooner than many of his colleagues.
"Frankly, a lot of people in the business thought it would go away. They sat on their backsides," he says. "The result is that some of them are just too far behind to deal with block exemption."
Although the new rules have been coming down the tracks for several years now, some car dealers are indeed having a hard time coming to terms with the concept.
Most seem to accept that the entire nature of their business will change irrevocably next October when the EU's ban on anti-competitive agreements between dealers and distributors comes into effect.
Others, who have not adequately prepared for the new dawn, simply cannot remain in the business, according to senior industry figures.
The EU has, quite correctly, identified arrangements between car companies and their dealers that restrict the choice of the customer - whether in terms of the initial purchase of a car, or in terms of after-sales service - as unacceptable.
From October dealers will have to ensure their way of doing business and even the premises from which they conduct it conform to a new set of standards entirely.
The car companies, in turn, have introduced new criteria to which dealers must subscribe to continue in business. These range from providing play areas for the children of customers to having a certain number of sales staff to ensuring that the reception area is of agreed dimensions.
"It was fairly difficult to come to terms with it but it also has to be said that the standard of a lot of dealerships was poor and certainly well below the EU average," says Pat Doyle. Having visited a number of dealerships in England in 1996, he decided to up his own game independently. He invested €1.5 million in his business.
However, even his foresight has not prepared him for the full effects of the new rules, and the criteria laid down by Peugeot. "They have told me I have to employ another two or three people. I already employ 20 and I consider that quite enough in the current economic climate. There are a lot of people losing their jobs out there and sales are not what they were. But I have to go along with what they want, if I want to stay in business."
The man in charge of implementing the massive changes caused by block exemption in Peugeot's network in Ireland is Frank Scanlon, marketing development manager. He points out that companies like his are following a European agenda and dealers selling every make have no choice but to accept what is coming.
"Like a lot of things, some people here thought this whole thing was 'something for Europe' and not for us. The fact is that we are all European and we have to operate to a European standard. No dealer can afford to have the old attitude of 'sell 'em and forget 'em'."
His dealers now have three separate agreements with Peugeot for selling cars, providing authorised repair facilities and for parts distribution. "The standard for all aspects of the business is being ramped up and those standards have to be met. People have to see that this amounts to the first real intervention in the motor industry by Europe in 100 years. It is change of the most fundamental kind."
He has already seen that some people in the business will be unable to cope with the massive investment and change of culture required. "We laid it out succinctly for our dealers. We had one-to-one sessions with people and we have an ongoing process of consultation. We have analysed every dealership. For some people it is going to mean relatively small change but for others it may involve building a whole new premises. It is inevitable across the motor trade that some people will simply have to call it a day," he warns.
Toyota's managing director, Dave Shannon, agrees: "The environment is going to be tougher and dealers need to be a lot sharper. An authorised repairer can set up next door to one of our dealers and there is nothing he or we can do about that. There is going to be no price fixing and a whole layer of protection is gone."
His dealers were as nervous as any others when first confronted with block exemption. "The initial reaction was that every Tom, Dick and Harry would now be selling Toyota cars all over the country. We have gotten over all that. But now we know what the real challenges are. If you ask me if we are there yet, then the answer is no. If you ask me are we getting there, then the answer is yes."
It seems that there are two inevitable consequences of the final phase of block exemption. One is that a number of dealers are going to fall by the wayside. Industry sources say both Opel and Volkswagen, for example, will have fewer dealers in the future - in the case of one distributor at least four dealers have been told they have no future after the end of the ancien régime.
The other is that the price of cars is going up, not down - regardless of how politicians might like to convince us to the contrary. Pat Doyle in Courtown says someone has to pay for all the improvements the customer will enjoy.
He predicts the average car will rise in price by between €200-300. "From the time I open my front door on a Monday morning it costs me €300 an hour to operate. The customer is going to get a lot more from next October, but the real question is can they afford the cost of all this expensive change?"