But the association warned that it will mean tough times are ahead for dealers when the 20 per cent rate is applied.
Sue Robinson, RMI director, said: ‘The RMI are pleased that the rise in VAT is to be deferred until January 4, 2011.
‘This will produce a short term stimulus in sales, with buyers bringing forward purchases, which presents an opportunity for consumers and dealers to beat the rise by purchasing or selling over the coming months.
‘However, today’s announcement will, in the longer term, damage the recovery and dent consumer confidence.
‘The retail motor industry is only just emerging from one of the most difficult periods in recent times and to increase the VAT rate does nothing to help either the consumer or the retail motor sector.’