The Commons Trade and Industry Select Committee, investigating car prices, heard evidence on Monday from the Consumers' Association that manufacturers are blocking cheap imports of European cars into the UK.

Cars in the UK are between 10% and 60% more expensive than in Europe, the association says.

Phil Evans: "The market is rigged"

Phil Evans, of the Consumers' Association, told the committee: "The whole structure of the market is rigged against private consumers getting a good deal."

He added that "because we're an island and a right-hand drive market, it is much harder for us to pop over the border and get a cheaper model".

'Crocodile tears'

Putting the case for the car industry to the committee, Alan Pullman, director of the National Franchised Dealers Association, said he supported a better deal for customers but the high value of sterling had kept prices high.

Martin O'Neill: "Crocodile tears"

"Overall we would welcome lower car prices in the UK," he said.

Mr Pullman said that one way to ensure that the ordinary retail buyer gets a better deal would be to make sure they are offered the sort of packages enjoyed by the company car market in the UK.

Large companies get discounts for the number of cars they buy - but the individual customer currently has no room to barter and has to pay more.

Committee chairman Martin O'Neill accused him of shedding "crocodile tears" over the plight of the UK consumer.

Ernie Thompson: Blame sterling

'High pound to blame'

Ernie Thompson, Chief Executive of the Society of Motor Manufacturers and Traders, told the committee "the prime reason" for higher car prices in the UK was the strength of sterling in comparison with other European currencies.

He insisted that just two years ago there were far fewer complaints about higher car prices, and the number had only risen along with the value of the pound.

He said joining a European single currency would greatly reduce the differences.

John Bridgeman: No need for an MMC referral

John Bridgeman, director of the Office of Fair Trading (OFT), told the committee that although the "continued existence" of high car prices over a recent period gave him cause for concern, the OFT had been unable to identify any particular cause for the high prices.

He said the matter of car pricing would probably be referred to the Monopolies and Mergers Commission.

He also insisted that he had to act in the interests not only of consumers, but also of the car industry itself.