Protectionism in the automobile industry

In most countries, there is an exclusive relationship between car-makers and dealers which operates as a complex monopoly against the public interest. Suppliers used one or a number of practices which prevent, restrict or distort competition to maintain market share, sometimes causing retail price distortion, although not necessarily making excessive returns.

In the UK, a complex monopoly exists in favour of the 24 car suppliers because of the selective and exclusive dealership arrangements most of them use. These impose tight controls on the number and types of cars dealers can sell and the geographic areas in which they can operate. Whilst there are some benefits for consumers by encouraging competition and providing assured standards and quality of servicing and repairing car, a number of the restrictions inherent in these arrangements were against the interests of the public, notably restrictions on: dealers advertising outside their areas; selling cars from other suppliers; acquisition of competing dealerships within their area; and the numbers and types of cars which a dealer may sell.