Auto manufacturers in Europe and the United States, the world's two biggest car markets, have a distribution headache: their retailing systems, built up in an incremental and uncoordinated way over several decades, are relics of the past. Given the wafer-thin profits that manufacturers in both markets currently realize on car sales, these companies are in sore need of the extra margins that a more efficient distribution system could deliver. Indeed, there is plenty of room for consolidation as well as other efficiency-enhancing improvements, but both markets have been highly regulated in ways that stifled change. There the similarities end.

European manufacturers haven't been inclined to undertake the performance improvements they need, because the regulatory environment so far has made them feel relatively comfortable. Exemption from various EU competition rules has given these companies a degree of control over their retailing systems that can only be dreamed of in Detroit. As a result, their high margins on spare parts and services have more than compensated for inefficiencies (the average European dealer, for example, is only a fraction of the size of the average US one).

But now the kind of regulation that favored European manufacturers over retailers—and, some would say,...