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Government 'must act now' on prices

Motor industry bosses have urged Trade and Industry Secretary Stephen Byers to make a quick decision over wording of new laws to deliver price cuts. They believe only a Government statement can end uncertainty in the market.

Senior officials from the Society of Motor Manufacturers and Traders, the Retail Motor Industry Federation and several carmakers met Mr Byers and his staff last week, ahead of the final deadline for consultation. They were pressing for an Order to be laid before Parliament by the end of July when MPs break for summer recess.

But the DTi is warning the executive Order could take longer than anticipated to finalise. A Government spokesman said: “If we make a decision this week it will make a mockery of the consultation period.” He understood that the Order would not be published until “the August-September period”.

The Government will make its decision against the background of the latest European Commission price report, which revealed the UK is still the most expensive country in Europe to buy new cars. Its publication came as a new internet-based car price guide was launched, claiming “limited” movement towards new car price harmonisation in Europe over the past 12 months.

Eurocarprice.com, which uses data from UK analysts Jato Dynamics, said that until the recent strengthening of the euro, UK prices had “moved ahead by over 10% compared to the European average”. But it conceded that transaction prices had fallen due to discounting and special offers.

Mario Monti, EU competition commissioner, warned he would continue to investigate possible restrictive practices by carmakers and rejected claims by the SMMT that the increased price differential was due to the strength of the pound.

He said the strong currency should have resulted in price reductions, particularly from continental European manufacturers.

“I am left wondering why competitive pressures in the market have not been sufficient to promote substantial price cuts in response to currency development,” he said.

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