New rules governing the future of car retailing in Europe will be announced in January by the European Commission.

But they look set to disappoint many who wanted the market to be fully opened up to new types of competition. EC sources last week suggested that the new regulations will only partially liberalise car manufacturer control over car sales.

The current rules - called Block Exemption - will expire next September. They have been much criticised for allowing car makers to keep prices high. However, the motor industry says the Block Exemption benefits consumers.

The source said the future would be defined by 'evolution', rather than 'revolution'. But analysts said one effect of the changes would be the gradual weakening of car manufacturers' finance divisions.

They said dealers would be given more autonomy to use the finance house of their choice, rather than being obliged to use the finance house of the supplying manufacturer.

Some manufacturers have begun buying up their own dealerships in Europe to ensure they don't lose control of sales after September. They include Mercedes-Benz, Renault and Peugeot — although Ford has recently pulled out of a UK initiative to develop its own dealer interests. (December 2001)