General Motors' UK unit Vauxhall has denied hiking prices ahead of the government's scrappage scheme as claimed by consumer organisation Which?

"It appears manufacturers are inflating prices just when the scrappage scheme requires them to chip in at least GBP1,000 worth of discount on a new car," the organisation said. But it added: "The reality is more complicated - global economic conditions have forced a rethink of UK car prices. But some manufacturers have managed to resist price increases despite the rising costs of raw materials and spiralling exchange rates."

GM UK chairman and managing director Bill Parfitt said in a statement: "We have made no moves whatsoever to compensate for the GBP1,000 contribution we make to the programme.

"Vauxhall has wholeheartedly embraced the scrappage scheme, which has boosted the flagging UK market to good effect. We have sold a total of 7,276 cars since the incentive was announced.

"It's true that we, along with many other manufacturers, have raised our prices this year, but this was before the scrappage scheme was announced on 18 May. Our 3 February increase pre-dated the scrappage scheme by more than three months. The only reasons we have raised prices are a severe weakening of the pound versus the euro, and a sharp increase in the cost of raw materials, such as steel."

Vauxhall said Which? Car's focus on the Insignia 1.8 SE's 14 per cent price increase since launch was "very misleading and selective" as the scrappage scheme appealed most to buyers at the lower end of the market where the automaker competes with its Corsa, Astra and Agila models. The Insignia has accounted for only 3% of scrappage trade-ins.

Vauxhall added it had taken 36,000 Insignia orders this year, compared with the 28,500 forecast, and that it had beaten off the Ford Mondeo to be best selling D-sector car in the UK.