DaimlerChrysler UK was this week expected to make a new offer to its Mercedes dealers who are fighting a one-year notice of contract termination. DCUK this month issued a two-year notice while saying the original remained in place.

The manufacturer's proposal was expected to be discussed at a meeting of the dealer council which is keeping talks going as the separate action group steps up its legal fight.

On Monday (April 30), the action group will ask a High Court judge in London to fix a date for a full hearing on the legality of the one-year notice. One Mercedes dealer said: “We need this to be resolved before the courts take their summer break. Our commercial futures are riding on the decision.”

Some dealers remain confident Mercedes will find a settlement formula and not allow the issue to be debated at a full court hearing because of the potential damage to its image.

A body of dealers hope Mercedes-Benz UK cars director Dermot Kelly will be made a scapegoat once the affair is resolved. Many are bitter about his handling of DCUK's wish to revamp the UK network.

Some dealer bosses have been assured they will feature in the new set-up.

DCUK insists its second and longer termination notice was a “precaution” and not a sign of failing confidence in its restructuring plans. Some Mercedes dealers privately accept this view.

Nick Adams, main spokesman for the Mercedes-Benz Dealers Campaign, said the two-year notice demonstrated an acceptance by DCUK that it stood to lose the court case.

Dermot Kelly said: “We have been advised, purely within this legal context, to issue a 24-month termination notice. We are confident the legal actions we have taken will be reinforced through any legal channel.”