It criticises the licensing body for failing to absorb costs by improving efficiency.
SMMT chief executive Christopher Macgowan says: "No business would survive if it passed the costs of going online to the customer, so why does the DVLA think this is acceptable?
"The Government takes £4.4 billion a year in road tax and just got an extra £32.5 million from last year's massive hike in the new car registration fee. Continuous licensing also means fewer road tax dodgers and more income. So where is all the extra money going?"
The DVLA's plans to increase income include:
Macgowan says: "The introduction of photo licences should be delivering benefits to society through reduced crime. If there were cost implications, the process should have been subject to an impact assessment. With proper scrutiny, the industry believes that costs could have been absorbed without hitting drivers in the pocket."