If retail car prices are to level out within the EU, pretax car prices will have to rise in many countries, according to the European automakers' association ACEA.
'The European Commission is wrong to assume automakers will lower prices throughout Europe to levels in the cheapest pretax markets,' said Camille Blum, secretary general of ACEA. 'We cannot just apply the lowest prices.'
Blum was interviewed as pressure on auto pricing grows in Europe. On 20 July, a continuing investigation by the UK government accused manufacturers of massive profiteering in the UK (at right). The latest six-monthly EC pricing study showed that pre-tax price gaps were as large as ever.
If the price gaps - often 45 percent - continue between EU countries, the commission says it will abolish in 2002 the laws that allow automakers to control dealer networks.
But ACEA makes clear that falling prices in expensive pretax markets such as the UK and Germany will be paid for by higher pretax prices in many more EU countries, such as Denmark, Holland, Finland and Spain.
Marc Greven, head of legislative and tax affairs for ACEA, said: 'For prices to converge, they would have to come down in the UK - a very important market.
'But the countries where pretax prices are low - like Denmark or Finland - are small. Manufacturers do not want to lose profit. Raising prices in certain countries may be part of what manufacturers would have to do - but that would not be enough.'
The latest EC study included Denmark and Finland for the first time. That increased the difference between the most expensive and cheapest pretax markets.
Denmark has a car tax of more than 200 percent, compared with 17.5 percent in the UK. Of the 75 models compared by the EC, 52 percent had the cheapest pretax price in Denmark, and 62 percent were most expensive in the UK.