Rising costs across all elements of the business are hitting UK motor vehicle dealers hard, according to Retail Motor Industry Federation National Franchised Dealers Association (NFDA) director Sue Robinson.

She said that costs associated with VAT (effectively a sales tax of 17.5%), regulation such as new rules on selling insurance, employment, health and safety and environmental obligations continue to increase, while profit from selling new cars is falling.

Said Robinson: "Dealers are being targeted from every angle and the recent rise in the London congestion charge is just one example of increased overheads that will add hundreds of thousands of pounds to retailers' cost bases this year.

"The situation is compounded by vehicle manufacturers' ever increasing investment requirements, as our members highlighted in the recent NFDA dealer attitude survey. Manufacturers need to be mindful that their dealer partners' finances can only be stretched so far before business performance is affected."

She added: "The RMI will continue to push for fairer conditions for dealers through ongoing negotiations with the UK government, European Commission and the vehicle manufacturers themselves."