Government guidance was updated yesterday - Showrooms and forecourts must close

The government guidance updated yesterday, 3 November 2020, still says in no clear terms that car showrooms will have to close in the second lockdown. However, dealers can still sell cars by click & collect or click & deliver models. The guidance has been updated to say that cars must be collected off premises.

Enter the draft regulations, which will set out the actual law for the second lockdown period, and which will take precedence over the published guidance. The draft is put to vote in the Parliament and may be amended. However, the current draft does not bear good news for car dealers.

Back in March 2020, car showrooms were specifically put on the closure list. The draft regulations extend this prohibition:

“26. Showrooms and other premises, including outdoor areas, used for the sale or hire of caravans, boats or any vehicle which can be propelled by mechanical means, and car washes.”

In a roundabout way, the suggested prohibition will cover a car dealership as a whole, not just the showroom.

In fact, car dealerships and outdoor non-food market stalls are the only retailers on the specific closure list as it stands.

The businesses which are required specifically to close may still operate the click & collect or click & deliver trading models, but not when click & collect or click & deliver refer to a restricted business. A restricted business means a business which carries out its transactions on its premises and the premises is required to close.

As premises for sale of cars are required to close, the regulations would suggest that any sale of cars would be restricted business and would have to cease for the lockdown duration. However, people are allowed to collect goods ordered distantly.

The draft regulations leave little room to keep a dealership open in the lockdown. The safe option would be to sell cars distantly and let the customer collect the car from a premises which is not required to close, a car park, for example.

The draft regulations introduce a fine of £1,000 for the first offence if a business carries on trading despite the prohibition.

The prohibition in the draft regulations is not what the government has advised to date. The regulations as drafted are certainly at odds with the publicised intention of the government. It may be possible to suggest that an expectation has been created and may be relied upon so car dealerships could still operate click & collect and click & delivery business models in the lockdown, and the regulations would have to be interpreted in a way compatible with the government intention.

 

Authors: Kiril Moskovchuk

Published: 04 Nov 2020

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