Ok I have no real expectations of anyone being able to help me here, but this is one of my last childhood lost favourites that I still haven't identified and I figured it was worth a shot. Part of the problem is it's not a feature length movie but a self-contained animated short, about 10 minutes or less. It's something we had taped on an old VHS, which I guess would date it to the mid-80s at the latest. Unfortunately I have no clue how well known it is and all I have to go on are vague memory fragments, hence my pessimism about ever finding the thing.
Here is everything I remember:
It was animated with mostly muted, brown and washed out colours; watercolour backgrounds quite possibly, and the whole thing had that cold quality that is often associated with eastern european animation (though I have no idea where it was actually from). The character designs had a stylised, angular approach a little bit like the designs you see in Samurai Jack. I don't think there was any dialogue - the characters just communicate with garbled grunts and noises.
If I remember right the basic story is a cautionary tale about an escalating feud between these two guys, who are pretty much the only characters. I have a feeling one was dressed in blue and the other red, but can't swear by that. I also have a feeling that cars were involved in the feud somehow (as objects, not being driven). They might actually have been car salesmen.
The final sequence has the growing tension between them resulting in a big fistfight or struggle, at which point things become kind of surreal in a way that's a little complicated to describe. Their upper halves carry on scrapping but the struggle causes their bodies to stretch and extend, leading to an odd climax where their bodies have stretched cylindrically over a long distance, with the fistfight moving along the line made by their bodies like a knot in a rope.
They eventually disentangle and their bodies return to normal, but they fall from the sky and end up hanging helplessly by their trousers from the branches of a dead-looking tree in a grim graveyard kind of place. The last shot is of them both hanging from the tree side-by-side, looking sadly first at each other, then finally at the camera which pans slowly backward away from the scene. The music and tone are quite bleak.
If anyone has the slightest clue what I'm talking about, I'd be both thankful and amazed!