It will also make cars more expensive for car buyers, warns the RMIF.
The new rules forbid dealers from getting car tax refunds on part-exchange vehicles. Only registered keepers can apply for refunds.
This means that dealers cannot apply for VED refunds, as they rarely become the registered keeper. The change will cost the industry up to £80 million per year.
It will also, says the RMIF, lead to job losses.
‘The timing of the introduction of the new rules could not be worse,’ said RMIF chairman, Paul Williams. ‘The new VED refund rules will remove a major income stream from dealers when they can least afford it.’
Williams raised this very issue during his meeting with business secretary Lord Mandleson in November.
‘The RMIF has, and is continuing, to follow this up, with meetings with a number of other figures in Government.
‘It is campaigning to have the change abolished, or at least deferred until the economic situation improves.
‘All dealers will be affected by this, and we will continue to communicate to Government how damaging the move could be, especially at this time.’