“Higher interest rates are a cause for concern for consumers and the retail motor trade,” said Retail Motor Industry Federation (RMI) chief executive Matthew Carrington following the interest rate rise announced last Thursday by the Bank of England.

The interest rate was raised by 0.25% to 4.5%. This is the second month running that the rate has been raised.

Carrington said: “Increasing the cost of debt could deter some from buying a car. Though this will primarily affect consumers, it could also affect car dealers, and the broader economy.”

At the same time, dealers will also be directly affected by the increased rate.

Carrington added: “In recent years car dealers have had to heavily invest in equipment and branding for their sites. For some their level of expenditure is already considerable, and this rate rise will not help.”

Carrington believes that further rate rises could have a serious impact: “This increase on its own will not have a great effect, but if the rate continues to increase to 5% by the end of the year, then we could see a negative impact in the retail motor trade.”