UK motorists could see the price of new cars fall under a shake-up of the motor retail industry.

From 1 October the block exemption rule that allows car manufacturers to control the supply and pricing of new cars comes to an end.

In the past, the motor industry has been accused of keeping prices in the UK high by using its block exemption powers, granted by the EU in 1995, to influence the supply and price of new cars.

The ending of the block-exemption means the motor industry will have to operate in the same competitive environment as other industries.

At present, UK pre-tax new car prices are among the highest in the European Union.

Wider choice

The changes should mean that franchised car dealers who were traditionally tied to a single manufacturer will now have the option to sell cars from as many different motor manufacturers as they want.

In addition, car supermarkets, already operating independently outside the franchised dealer network, should find it easier to source new cars than in the past.

This should open the way for new entrants into the car retail market to offer cut price new vehicles.

The motor manufacturers have been given a year's grace to fully open up the supply of cars and prepare their dealers for the new competitive environment.