The value of second-hand cars could drop by £2 billion this year because of a downturn in spending.
It is feared that the rising costs of mortgages, fuel and food could slash the amount of money spent on used cars.
This will not be helped by proposed car tax reforms, it is said.
Figures released by Sainsbury’s Finance predict that £22.7 billion will be spent on second-hand cars between February and August, compared with £24.8 billion in the previous six months. That’s a drop of 8%.
Mark Norman, an analyst with CAP Motor Research, said: ‘The main reason at the moment is down to the general economic climate. People are wary of spending.
‘But towards the end of this year and the early part of next year, as new Vehicle Excise Duty bandings come on to the horizon, the process will be affected purely by VED. Certain cars will be virtually impossible to sell.’
Despite claims that the tax increases are to help the environment, official figures have reportedly shown that the effect will be to double revenues to more than £4 billion.
It is estimated that emissions will be cut by just 1%.
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