Speculation is mounting that Government action to reduce new car prices in the UK is merely a fortaste of more wide-ranging car retail reform following a review of the European Commission block exemption governing car sales through the European Union.

After publication of the New Cars Inquiry report in April, Byers said: 'The Commission makes a number of recommendations for more fundamental change which relate to practices permitted by the EU's car block exemption rules. I believe these are important changes for the longer term in altering the structure of the market. Although the block exemption formally runs until September 2002, our discussions with the European Commission could bring about changes in the UK before then.'

Leading motor industry academic Professor Garel Rhys, of Cardiff Business School, was quoted in the Financial Times as saying: 'This is very much a holding operation pending a review of the block exemption.'

And a Vauxhall spokesman said: '2002 is not that far away and Trade and Industry Secretary Stephen Byers wants to see a radical overhaul of the block exemption. It is an interim move.' ##image21##