IMI calls on Leave campaign to clarify future of block exemption for independent garages

The IMI is asking the Leave campaign to explain how it will protect independent garages if a Brexit takes place.

Professor Jim Saker of the School of Business and Economics at Loughborough has told the IMI that many of the 500,000 jobs and businesses in the sector it represents could be at risk after Brexit. The sector that already faces challenges from new technology in modern vehicles could lose access to vital information from the leading car companies that EU Regulations provide, with the potential to have a catastrophic effect on the independent sector in Britain.

According to Saker, the main issue comes from the possible loss of the EU Block Exemption Regulations. Without the ‘Right to Repair’ scheme, Saker believes that manufacturers will not share information on new cars if they don’t have to, making it impossible for independent garages to maintain their businesses.

Saker said: “The manufacturers could potentially hold all the cards going forward. In the absence of the EU Block Exemption Regulation (BER), or something very similar, they could effectively shut the independents out and many of those businesses would ultimately fold. Warranty servicing would be kept within the franchised dealers, competition would be forced out of the market and prices for drivers would inevitably rise.

“It is easy to see that with loss of the EU Block Exemption Regulations, up to half of the independent garages in Britain could go bust.  This would result in the loss of around 50,000 skilled jobs and with the resulting reduction in competition I would expect to see a 30% increase in prices,”

Based on Saker’s predictions the IMI estimates that the price increase for servicing alone would be an average of £100 per year for every driver.  But there would also be additional cost for repairs and a knock on rise in insurance premiums.

The IMI has taken a neutral position on the referendum because the opinions of industry people appear to have been split down the middle. Nevertheless, the advice from Professor Saker has prompted the Institute to seek some answers and assurances for the industry that have been absent from the campaign to date.

IMI CEO Steve Nash said: “Professor Saker’s Paper is certainly thought provoking and whilst it might outline a worst case scenario it also highlights a key issue on which we have as yet no definitive answers from those who want us to leave Europe. We therefore feel it is necessary to fuel the debate and hopefully get some answers for people who work in the retail motor industry ahead of the referendum.

“At the very least it warrants a response from the Leave campaign to tell our industry how they would mitigate against what looks like a Doomsday scenario for thousands of businesses and a raw deal for millions of drivers after Brexit.”