Franchised dealers have been warned that if DaimlerChrysler succeeds in overhauling its network, other manufacturers will copy its actions leading to “less competition and price rises”.

Mercedes-Benz UK dealers, together with the Retail Motor Industry Federation, took their campaign to the consumer affairs programme Watchdog last night to highlight their protest against the manufacturer's decision to terminate the contracts of its entire network.

Nick Adams, a key member of the Mercedes-Benz UK Dealers Campaign said on the programme that the action would mean Mercedes could increase prices and that it would make it more difficult for owners to find servicing outlets.

Alan Pulham, RMI president, said on the show that MB-UK's move had “terrible implications” for the motor industry.

“"It's a copycat world - if DaimlerChrysler gets away with it, other manufacturers will say 'we'll do that' and we will see less competition and prices will rise for everyone,” he said.

Quentin Willson, who now works for Virgin Cars as its 'voice of the consumer' and a guest on Watchdog said: “It's the future - every manufacturer is looking at this scheme with interest. Some dealers are not delivering the Mercedes-Benz experience. The move will allow people to buy direct.

“There is massive competition out there, you can buy from car supermarkets, imports, online. The company had to step up its act in the face of growing competition.”