Mitsubishi dealers have had to take a margin cut and reduced bonuses to help fund the highly-publicised price cuts of up to 15% announced this month.

Sales margins are thought to be as low as 5% on Carisma and between 7% and 10% on other models.

A Mitsubishi spokesman admitted there had been “some resistance to the cuts from smaller dealers” when the network was told of the changes during a special conference in Birmingham two weeks ago.

“We told them they would make more money by selling more cars. It's as simple as that,” he said.

“Dealers had been negotiating away their margin by discounting the cars. Now there is no margin to discount. Colt Car Company is not the Charity Car Company.”

He added that the price cuts had been made in the face of fierce opposition from Mitsubishi in Japan and without manufacturer support.

“This is our action - the factory thinks our cars are now seriously under-priced,” he said.

New Mitsubishi Motors UK sales and marketing director Paul Williams clashed with the Society of Motor Manufacturers and Traders after announcing the price cuts.

The SMMT claimed the price cuts were just a marketing gimmick, but Mr Williams said: “If the SMMT had done its job properly, we wouldn't have had to do this. They have done a dismal job.”

The price cuts are expected to help increase full-year sales from 20,000 this year to 26,000 in 2000. “We thought our cars were reasonably priced: the market told us differently. If it takes a small player to move the market - and even if we double our sales we will still be a small player - so be it,” said Mr Williams.