Mercedes-Benz has denied an allegation that its decision to take control of its outlets from franchised dealers in London, Birmingham and Manchester will end price competition.
The Retail Motor Industry Federation made the accusation in response to a recent announcement by Mercedes-Benz decision to take control and ownership of all outlets within the cities, branding it as a 'price control' measure.
Launching the attack, Alan Pulham said: "This has to be extremely bad news for Mercedes customers throughout the UK, Inter-dealer competition will become ineffective and the lower prices sought through the Government's DTI order are unlikely to be realised."
Mercedes dealers, with the RMI's assistance are about to appoint legal advisers to challenge Mercedes' action.
The decision to launch a challenge was made at a Mercedes car dealers' meeting in Birmingham last week where 150 dealers representing 90% of the network unanimously backed a move to take legal action.
It comes in response to an announcement by Mercedes-Benz will oust its franchised dealers from the three cities to take its own control, having lost faith in its network to retain customer loyalty.
All UK Mercedes dealers have also been given 12 months' notice of termination of their contracts.
But a Mercedes-Benz UK spokesman said this afternoon that the changes will make no difference to pricing.
"Prices aren't set in stone now, they are recommended. They will continue to be recommended when we take over the city sites.
"What we are doing will enhance customer satisfaction overall. The number of Mercedes outlets is to increase nationally from 159 to 175."