The highest level of dealer protection?

Manufacturers will be made responsible for unsold cars under a new law in Spain, Automotive News Europe reported on 17 February. Dealers would be entitled to claim a refund for unsold cars which have been hanging around for three months, and sometimes to charge the carmaker for their sales teams' efforts and other expenses.

The manufacturers will also be required to compensate terminated dealers for loss of business and the cost of layoffs. The same would also apply if the dealer's appointment was not renewed. This echoes proposals, emanating from the European Distribution Lawyers group and other sources, for dealer agreements to be treated like commercial agency agreements under European Union law.

Sounds too good to be true? Perhaps it is - though it's not yet 1 April, as you'll have noticed. In fact, it seems that the vehicle manufacturers were taken rather by surprise when the proposed Spanish law was announced, and they have prevailed on the Spanish government to put it on the back burner for the time being. It certainly seems to have contributed to a rift between the two sides of the industry in Spain.

The law was published along with a bundle of other measures to stimulate the Spanish economy (though how this one, however worthy, might be expected to have that effect isn't clear). The industry ministry quickly announced that it was calling a meeting to assess the new law with regional governments, unions and car manufacturers (did they forget dealers?). Revised proposals are expected within three months.

ANFAC, the Spanish carmakers' association, at first indicated (predictably) that its members would have to reconsider their investment plans. ANFAC chairman Francisco Javier Garcia Sanz said that the lawmakers had "made a mistake and they are going to have to correct it. If they do not, they will be responsible for the loss of investment and employment that this law will cause." Exactly the sort of thing we'd have said back in the days when I worked at the SMMT. On the other hand, the dealers's association Faconauto said that the new law would safeguard jobs by reforming a legal framework that left them at the whim of changes to dealer agreements. According to the Spanish website cincodias.com, Faconauto claims the price of cars would come down by an average of €400 to €500 as a result of the law and the closure of 30 per cent of dealer outlets would be prevented. CincoDias also reports that ANFAC points out that the protection of the law would benefit shareholders, not employees, of dealers, an analysis that might rebound on the vehicle  manufacturers one day.