Euro MPs voted yesterday against changes to the car market which could have cut the price of new cars by an average of £2,000 by 2003. The vote came after intense lobbying from the motor industry, including a visit by the head of Ford Europe to Tony Blair.

The European parliament was voting on proposals put forward by the commission to open the car sector to greater competition. Under the current regime, car manufacturers have a "block exemption" from the usual EU rules on competition and are allowed to fix prices for different EU markets, limit dealers to selling just one marque, and oblige car buyers to stick to in-house service centres and warranty provisions. The result has been that customers in the UK pay much higher prices for their cars than their European neighbours.

The Consumers' Association has been campaigning to have the rules changed and for an end to what it describes as a rip-off.

But manufacturers, particularly in Germany where an election campaign has given them considerable leverage, have fought to keep changes at bay. MEPs voted to postpone any changes until at least 2005, in effect voting for the anti-competitive system to remain.

The move angered British MEPs, who said consumers had been waiting too long for cheaper car prices.

The European commission does not have to abide by the parliament's decision. It will make its decision later this sum mer, before the current arrangements expire in October.

The competition commissioner, Mario Monti, has warned repeatedly that exclusive dealership and distribution networks will be broken up unless unjustifiable price gaps between national car markets in the EU are closed.

He may opt for a compromise arrangement limiting car makers' rights to insist that their distributors in one EU territory do not "trespass" on another sales patch.

The commission's recommended first step is to loosen the link between manufacturer and distributor, allowing different car brands to be sold in the same showroom, as well as permitting the sub-contracting of servicing and repairs without the loss of consumer rights.

· The number of new cars bought by private customers grew by 42% in April compared with the same month last year. The rapid growth, which continues the trend of the previous three months, came despite the government's aim to increase the use of public transport.