Motor giants boycott inquiry into high price of cars in UK

UK CAR prices remain up to a third higher than on the Continent despite the strength of the pound, a damning survey carried out by the European Commission will show tomorrow.

The survey will reveal that popular models, such as the Ford Fiesta, Ford Focus, VW Polo and Peugeot 306 remain between 20 and 30 per cent more expensive in the UK, even though the high value of the pound should be reducing the price of imported cars.

A senior EC official warned yesterday that unless manufacturers made it much easier and simpler for private buyers to shop around in Europe for the cheapest prices, Brussels would dismantle the system that allows them to control car dealership chains.

Konrad Schumm, of the EC's competition directorate, was giving evidence to the first open hearing held by the Competition Commission as part of its investigation into the prices of new cars.

He said that unless manufacturers removed obstacles to buying right-hand drive cars abroad then the outlook for the so-called block exemption system was bleak.

All of Britain's main car firms, including Ford, Rover, Vauxhall and Nissan, have boycotted the open hearing. Denise Kingsmill, who chairs the inquiry, said she regretted the move but said the manufacturers would not be penalised.

There was harsh criticism from other quarters. Tony Woodley, national officer of the Transport and General Workers' Union, described the refusal of the car companies to attend the hearing as "disastrous" and added: "It is a very serious mistake by the manufacturers not to be here. It sends an incredibly bad signal to the public that they have got something to hide."

Their absence led to some embarrassing silences during yesterday's proceedings. When Alan Pulham of the Retail Motor Industry Federation, which represents car dealers, was asked why its members could not import cheap right-hand drive models from Europe for UK customers, he replied it was because manufacturers had "the power of life and death" over dealerships.

Ms Kingsmill then asked if any motor manufacturers in the hall would like to respond, only to be met by a prolonged silence. When she invited their trade association, the Society of Motor Manufacturers and Traders, to reply, there was a one-word answer: "No."

Mr Schumm told the inquiry that Brussels was considering taking action against Mercedes Benz and Opel, the European arm of General Motors, for anti-competitive practices.

The German manufacturer Volkswagen has already been fined more than 100m euros and earlier this month Volvo admitted rigging UK car prices.

The EC's last six-monthly car price survey, published in February, found that the UK was the most expensive market for 57 of the 76 best-selling models with the price of a Ford Mondeo, for instance, 34.6 per cent higher than in Spain.

The EU block exemption expires in September, 2002. It allows car manufacturers to dictate who can sell their vehicles, where, in what quantities and at what price.

Phil Evans, of the Consumers' Association, told the hearing that this enabled a "price-discriminating oligopoly" to fix excessively high UK prices. The Competition Commission is due to report on the issue to Stephen Byers, the Secretary of State for Trade and Industry, in December.

THE COST OF BUYING IN BRITAIN

FORD FIESTA

COST IN BRITAIN

pounds 8,050

CHEAPEST PRICE IN

EUROPE

Portugal

pounds 6,250

RENAULT CLIO

COST IN BRITAIN

pounds 7,995

CHEAPEST PRICE IN

EUROPE

Portugal

pounds 6,261

VW POLO

COST IN BRITAIN

pounds 7,995

CHEAPEST PRICE IN

EUROPE

Sweden

pounds 6,057

VW GOLF

COST IN BRITAIN

pounds 12,255

CHEAPEST PRICE IN

EUROPE

Netherlands

pounds 9,355

FORD FOCUS

COST IN BRITAIN

pounds 13,000

CHEAPEST PRICE IN

EUROPE

Portugal

pounds 10,172

PEUGEOT 306

COST IN BRITAIN

pounds 11,995

CHEAPEST PRICE IN

EUROPE

Spain

pounds 9,185

FORD MONDEO

COST IN BRITAIN

pounds 14,400

CHEAPEST PRICE IN

EUROPE

Spain

pounds 10,698

VW PASSAT

COST IN BRITAIN

pounds 16,105

CHEAPEST PRICE IN

EUROPE

Netherlands

pounds 12,988