Cheaper cars could soon be available in Britain following a shake-up today of restriction on new sales and repairs.

Proposals by the European commission to be unveiled after years of haggling with the car industry mark the beginning of the end for exclusive car dealerships and distributorships, and move towards car supermarkets, where a variety of brands will be sold under one roof.

The changes will be slow, but EU competition commissioner Mario Monti has rejected pleas from carmakers to keep their exclusive brand networks, and is nudging them into line with EU rules on fair competition.

Brussels has allowed manufacturers to ignore the normal rules for 20 years, accepting the argument that cars require special treatment and need specialised sales points and after-sales service.

But the current "block exemption" from the rules expires in October - and Mr Monti is seizing the opportunity to prise open the market.

Consumer groups have been lobbying hard for a new regime, arguing that current arrangements restrict competition and artificially inflate prices. Car makers, they claim, have used their special status to divide up the European marketplace, effectively rig prices and distort the single market.

Years ago manufacturers were warned the concessions would be removed if the price gap between identical cars in different EU markets rose above 12%.

In fact, the commission has regularly reported price differentials of 40% and even 50% for the same car in different countries.

Shaking up the market could now mean cheaper cars in the highest-price markets, notably Britain. Under the new plans, car makers will retain some control over how dealers sell their cars but the way will be cleared for supermarkets to sell a wide range of models.

But consumer lobbies fear that the limited nature of the changes will cut car prices by hundreds, rather than thousands, of pounds.

Labour MEP and spokesman on competition policy Peter Skinner said: "The commission must stand firm against a powerful car lobby. If Mr Monti keeps his nerve the big price tags on British cars will continue to fall.

"For 20 years the motor lobby has blocked proposals for reform at every turn. This time there must be no loopholes and no escape clauses. British motorists have been waiting for a competitive car market and they must not be victims of further delays." He added: "Europe's car sales are rigged in the interests of the motor giants. We must shatter the motor industry's stranglehold over distribution and give consumers from Lisbon to London a fair deal."

Proposals from the commission include:

· dealers will no longer be restricted by car makers to certain geographical areas, and will be able to sell more than one brand of car at the same site, as long as they are in separate areas of the showroom. This ends the current exclusive licence granted to one dealer in each area. · dealers will be able to branch out and open secondary sales points in other countries from October 2004.

· dealers will no longer be obliged to provide repair services, but they must ensure that when they subcontract such services, servicing and repairs are to manufacturer-approved standards.

· dealers will be free to deal with 'foreign' sales, with no manufacturer's restrictions on their right to take orders from customers seeking personal import arrangements.