It is the third cut in interest rates since early December.
Sue Robinson, director of the RMI's National Franchised Dealers Association (NFDA), said: "By reducing the interest rate to 5%, The Bank of England is giving the economy chance to make up some of the ground lost during the ongoing credit crunch.
"Retailers, including car dealers have felt the pinch during the last few months, and although March car sales figures were up slightly on 2007, the outlook for 2008 remains uncertain unless interest rates stay low.
"Interest rates have a huge impact on the affordability of new cars, as so many are purchased via finance deals. Hopefully with the continuing fall in interest rates, the availability of car finance will remain strong."