A study by Pricewater-houseCoopers found that British dealers sold an average of 444 cars each in 2004 compared to 330 in Italy, 236 in Spain, 173 in Germany and 158 in France.
This led PwC to conclude that the UK market has consolidated to a greater extent than other European markets leaving British dealers best placed to exploit the axeing of the clause.
PwC said however, that it would only be the larger dealer groups that would be able to take advantage of the ending of the clause in October.
“Only large companies already operating on an international basis (such as Pendragon and Inchcape) have the resources to expand across borders. The fact they have already gone abroad suggests the abolition of the location clause will make very little difference,” said Stephen Eames, PwC director.
Eames said the effect of block exemption on the industry had been minimal and had not had the impact that many had predicted.
“Despite the initial controversy when the new block exemption regulation was first proposed it is actually issues like market conditions which have had a much greater impact on the sector.
“Changing the rules will not change economic reality and few dealers will expand unless the business fundamentals are right,” he added.
Meanwhile, PwC has warned that the current high level of investment in the automotive industry is unsustainable and private equity investment in the sector is set to drop.
According to research by the company, under-performing assets in the automotive industry will dampen investors' interest in the market.
“The days of jumbo deals are over for the foreseeable future. Mid-market deals will certainly dominate during the next 12 months and private equity deals are likely to slow down,” said Philip Wylie, automotive sector leader for PwC corporate finance.