The Bank of England has cut the UK interest rate from 0.5 per cent from 1 per cent.
The cut - to the lowest ever level - has been seen as a positive move for the motor trade.
"It means consumers will have a greater disposable income, which we hope will engender greater confidence,' said Sue Robinson, director of the Retail Motor Industry Federation (RMIF), representing 8,000 businesses in the UK's retail motor sector including new and used car dealers.
"With a greater disposable income, many consumers should now feel more confident about major purchases.
"Car dealer showrooms are now providing a wide range of 'value-for-money' deals on financial packages as well as new and used car stock," she said.
The Bank of England has now reduced the rate 4.5 percentage points since October.
In another move it announced today it would pump £75 billion into the economy, known as "quantitative easing".
The move is meant to encourage banks to start lending funds to each other again, as well as to individuals and businesses.