The European Automotive Aftermarket: The impact of the economic crisis and of the protection of competition principles of the SMEs of the sector

EESC meeting on SMEs, Crafts and Professions Category 05 March 2013 Sylvia Gotzen FIGIEFA Secretary General 1

Joint presentation by

AUTORIPARAZIONE

Servizi alla Comunità AUTORIPARAZIONE

The European automotive aftermarket The automotive sector is more than only the car industry! The European automotive economy encompasses the production of cars…

but also their operation throughout their working lives/the services that keep them on the road

The European automotive aftermarket Training institutes

Repairers

Europe’s aftermarket is a chain of operators: Data publishers

Parts manufacturers

848 000 companies 4,7 Million employees Tool manufacturers

Roadside patrols

Remanufacturers

Parts wholesalers

Structure of the Aftermarket SMEs are the backbone of the aftermarket Companies on the aftermarket are predominantly SMEs: • Example: 93,7% of all parts distributors on the European automotive aftermarket are small, 5,6% medium and only 0,7 % large companies (Wolk Aftersales Experts, 2012) • SMEs owners or company managers are generally highly involved in all steps of the business/work processes

• Direct and long-term relations with suppliers/clients and their staff • They are sustainably managed for the long term • SMEs create and retain local and regional employment  SMEs on the aftermarket should receive the same promotion by the European policy as SMEs in other sectors.

The economic crisis and the aftermarket Overall financial and economic crisis 1) ~2008 - 2010 • General crisis of the automotive industry • Car manufacturers and OEM-related first equipment suppliers highly affected by the crisis • Many EU Member States reacted with financial support (scrapping schemes) • Aftermarket less severely affected • As a consequence, vehicle manufacturers have i.a. intensified their aftermarket business activities

The economic crisis and the aftermarket Overall financial and economic crisis 2) 2011 onwards: A varied picture • OECD: “Even though the European car industry clearly has problems, it does not seem justified to speak about a European-wide crisis of the car industry as some car manufacturers are doing reasonably well”. • Aftermarket is affected as well, e.g. Italy recorded a drop of 30% in repair and maintanance services • Consumer purchasing power has strongly decreased, with the consequence that repair and maintanance is postponed or not carried out at all.

EU Policy Framework Problems with current policies • The current European industrial policy and CARS 2020 focus their activities very strongly on the car manufacturers

• They make the vehicle manufacturing industry look more important than it is: “12 million jobs” • The aftermarket is distinct from the new vehicle market, it is also its indispensable complement. • The whole of the European automotive economy must be taken into account

 Design a „good“ industrial policy which takes an holistic approach of the automotive sector and supports the entire lifecycle of a vehicle

Figures provided by vehicle manufacturers Problems with current policies

The functions of the aftermarket Contribution to EU’s economy and competitiveness • Maintain effectiv ecompetition and provide freedom of choice in repair and maintanance services-close to the consumer

• Ensure affordable mobility for 260 million motorist consumers during the entire life of a vehicle • Contribute to Europes competitiveness

• Support keeping 4,7 million jobs local and sustainable

Suggestions by CNA / ADIRA / CONFARTIGIANATO / FIGIEFA

EU measures to soften impact of the crisis for SMEs in the automotive aftermarket Competition policy • Enforcement of Automotive Block Exemption Regulation 461/2010: Help SMEs to enforce prohibition of (contractual) clauses which oblige or lead car owners to exclusively use the authorised network for the repair and maintenance operations (e.g. misleading warranty conditions) • Ensure that the insurance industry respects the car owner’s freedom of choice for repairs for the workshop of his or her preferrence.

Suggestions by CNA / ADIRA / CONFARTIGIANATO / FIGIEFA

EU measures to soften impact of the crisis for SMEs in the automotive aftermarket Fiscal policy • Reduction of VAT for the repair and maintenance sector (e.g. 10%) • Possibility of fiscal deduction for repair and maintenance expenses Promotion of environmentally friendly technologies in the entire value chain • Incentivise the installation and use of fuel gas equipment in vehicles. Short term beneficial effect for reduction of emissions and creation of jobs

Suggestions by CNA / ADIRA / CONFARTIGIANATO / FIGIEFA

EU measures to soften impact of the crisis for SMEs in the automotive aftermarket Cutting red tape • Type-approval legislation for aftermarket products (e.g. test equipment) are still defined by EU Member State bodies who add national clauses thus hampering the marketing and free trade of our products.

Better access to finance • With increasing technological complexity of vehicles, a continuous investment in tools, test equipment, information and training is crucial for survival. However, access of SMEs to bank credits is currently difficult and must be eased.

Suggestions by CNA / ADIRA / CONFARTIGIANATO / FIGIEFA

EU measures to soften impact of the crisis for SMEs in the automotive aftermarket Improve functioning of existing legislation: Access to technical information • Despite the Automotive Block Exemption Regulation or the ‘Euro 5’ legislation, there are still major deficiencies in the availability/release of technical information by vehicle manufacturers (see Report of October 2012 the French Competition Authority on the Functioning of Competition in the Aftermarket): SMEs need support for enforcement activities.

Suggestions by CNA / ADIRA / CONFARTIGIANATO / FIGIEFA

EU measures to soften impact of the crisis for SMEs in the automotive aftermarket Impact assesment for new legislation

• The impact assesment for any new European legislation sould not only consider the competitiveness effects for the vehicle manufacturers but also its effects on the aftermarket

The European Automotive Aftermarket: The impact of the economic crisis and of the protection of competition principles of the SMEs of the sector

Thank you very much!

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