Renault announced an extended warranty of three years/60,000 miles and new two-year/18,000-mile service intervals for petrol and diesel models at the British International Motor Show. The company said it had always planned to unveil a new package at the motor show but had been overtaken by recent announcements from Ford and Vauxhall.

The guarantee is a one-year manufacturer warranty and two-year Renault dealer network extended dealer warranty. Manufacturers which do not already offer a three-year warranty in the UK are likely to increase them to match those offered by Ford, Vauxhall and Renault.

A spokesman for Peugeot said although there were no plans to respond to Ford's move, nothing was ruled out, and gave the strongest indication yet that price realignment was likely.

He said: 'We are monitoring what our competitors are doing and if there is a substantial change we will try to ensure we are still in a situation where we are competitive. At the moment we have competitive offers in our range.'

Citroen said there would be no announcement of price changes at the show this week, but the company would not be left out of a list price reduction among the volume manufacturers.

A spokeswoman for Volkswagen said: 'We have no immediate plans to make any announcement, but we will be keeping an eye on the market place.'