DIRECT delivery of vehicles from manufacturers to fleets, bypassing the dealer network, could be one of the upshots of a shake-up in car distribution on the cards for next year. With the European Commission to decide whether the block exemption, which governs the distribution of vehicles across the UK and Europe, should be renewed in September 2002, Vauxhall chairman and managing director Nick Reilly believes 'some form of franchise dealer network will exist in the long term'.

He added: 'It was not vehicle manufacturers which put the Block Exemption in place, it was various governments. Vehicles are too complicated a product to have a 'free for all' distribution system.' That view, however, is vehemently opposed by Sir Richard Branson, who has been to Brussels to 'champion the rights of the British new car buyer'. Their comments come as the European Commission hears responses to its report into block exemption which appeared to signal an end to the current vehicle franchising rules.

Nine months ago Branson launched internet-based Virgin Cars and at the European Commission he called for the removal of all barriers to car distribution. 'The barriers mean British new car buyers pay too much and have less choice of where they buy their new car,' said Branson. He claims to have saved £6.5 million for customers who have bought 3,200 new cars through Virgin Cars worth more than £50 million, instead of through traditional franchise dealerships.

However, while Vauxhall has sold more cars on the internet than any other manufacturer - about 1,500 units - Reilly argues: 'We need dealers to supply the vehicles. We will still have a dealer network in the long term. Car buyers need to be protected. It is not just about selling cars but it is about handling recalls, servicing and repairs. There will be some changes, but I don't think they will be profound. We will not 'do a Daewoo' or just sell cars over the internet.'