Dealers will be able to compete more easily over car servicing

The end of the "location clause" under new EU rules means dealers can now set up new franchises wherever they like.

This change from the old carefully managed distribution networks could improve competition and lead to lower prices being offered.

But there is some concern that smaller dealers could be forced out of business by the changes.

BBC correspondent Richard Scott said that, up until now, each car manufacturer was only allowed one official franchise in each area.

Now dealerships could set up new franchises in what would have been another dealer's patch, he said.

Multi-brand showrooms

They can also advertise their services in other dealers' areas.

They will also be able to compete more easily over car servicing which could lead to smaller bills.

The change also paves the way for multi-brand car showrooms.

But there is concern that smaller dealers could be forced out as bigger rivals with more financial muscle expand into their area, our correspondent said.

The new rules mark the latest phase of EU measures to open up the car market and to address the disparate car prices seen across Europe.