Sales have been badly damaged because the vast majority of the cars that Ford and Vauxhall sell in the UK are manufactured in mainland Europe. There are fears that other European-based manufacturers, such as Volkswagen, PSA Peugeot Citroen and Fiat, may also now increase prices.
Ford have increased prices by on average 4.7%, and Audi are to increase prices by around 2%.
New car sales plunged 11.3% last year, including 21.2% in December, due to the current lack of credit. In response, car makers have cut production and jobs in order to meet the low demand and companies such as Jaguar Land Rover have pleaded for state assistance. In Europe, there are reports that PSA Peugeot Citroen and BMW could agree a Franco-German alliance as the industry seeks to consolidate.