MERCEDES Benz has triggered a round of car price-cutting in the luxury car sector after slashing new car prices across its range by up to 20%. The moves follow the Government's publication of legislation designed to cut UK prices by 10% in the wake of the Competition Commission's inquiry into Britain's retail motor industry.

The luxury German marque reduced prices of the A140 by £1,700 to £12,790, the SLK roadster by £2,750 to £30,890 while an E430 comes down by a whopping £9,940. Upmarket rivals have so far failed to react, although BMW and Audi said they were 'reviewing the situation'.

List prices started tumbling on Monday, when Lexus cut the price of its IS200 to £18,340 and said the rest of its range would also come down in price. On Tusday, Mercedes announced cuts of up to £14,600 on some models and Sister company Chrysler Jeep also announced cuts of up to £4,000 on certain models. The entry level Jeep Cherokee 2.5 comes down by £2,000 to just £15,995, but Chrysler cars - including the new PT Cruiser, retain their current price tags.

To date, there is no sign of the cuts spreading to the volume sector, with Jaguar's parent company Ford insisting it would not be altering prices of it's upmarket subsidiary's cars. Vauxhall also said it had no plans to cut list prices, but announced a new edition of the Vectra 1.6, with air con and CD player, with a list price of £10,995.

Some volume marques have already shaved list prices or increased specification and industry commentators are speculating that traditional fleet discounts could be under threat.

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