The bosses of two of Europe's leading car makers have defended the new car pricing structure , blaming the lack of tax harmonisation and currency fluctuations on Continental price differences.

At a conference in Brussels organised by ACEA, the European carmakers' association, Fiat chief executive Paolo Cantarella and Frederic Saint-Geours, Peugeot director general claimed the distribution system was not a factor in car price.“Eight years on (since the creation of the single market) price harmonisation is still not a reality,” said Mr Cantarella. “This is not because carmakers have prevented it from happening but because we do not have the right economic conditions. Simply, there is not enough of a single market.”

Mr Cantarella argued the franchised dealer system provided choice and convenience to consumers. It also allowed close-to-home service by specialist dealers, fully trained and fully equipped to perform any type of repair.

“If you are spending your holidays in the south of France, dealers there will repair your car even if you bought it in Germany, Holland or England,” he said. “If your car is under warranty, they will repair it for free.”

Mr Cantarella said manufacturers were approaching the review of block exemption, by the European Commission with “an open mind” but warned no other country in the world was experimenting with radical changes in car distribution.