America's National Automobile Dealers Association (NADA) is applauding a ruling by the country's Internal Revenue Service that will allow car and truck dealers to use replacement cost to value their year-end parts inventory.

"This is a huge victory for dealers," said NADA's chief operating officer of public and legal affairs Bill Newman, who said his organisation had spent eight years lobbying the IRS for the time and money-saving change.

The ruling effectively reverses the old IRS position that required year-end parts inventories to be valued using actual invoice cost.

According to NADA, strict compliance with the actual invoice approach required complex and expensive administration, along with a significant amount of cooperation from manufacturers.