Year-on-year sales dropped by 2.2 per cent in May, against the backdrop of declining consumer confidence.

Sue Robinson, director of the RMIF's franchised dealer division, said the interest rate rises, coupled with the expectation of a property market slowdown, had dented consumer confidence and had a negative impact on the market.

“May's car sales drop amply demonstrates the negative impact of the recent interest rate rises on consumer spending,” said Robinson.

“March and April's figures were boosted by the launch of the new 07 plate, so what we are seeing is really a return to the anticipated sales levels for the year. However, a stabilization of interest rates might allow the market to recover.”