The new entry point into the used car market for dealers could become £2,000.
The RAC says that it is simply very difficult to sell a car that meets all legal requirements at much below this level, thanks to the Consumer Rights Act.
Sean Kent, director, corporate and independent dealers, said: "We are not saying that all cars priced below £2,000 are of poor quality or that dealers operating in that sector are not operating with customer interests at heart.
"But what we are hearing increasingly from independent dealers is that the cost of acquiring a car and selling it to the standards required by the Consumer Rights Act is difficult to achieve for much below this figure.
"It is not a hard and fast rule but it is definitely a trend that we are increasingly seeing across the market and chimes with other recent reports that small franchise dealers have abandoned the sub-£1,500 sector.
"In effect, the Consumer Rights Act is causing a shift in this sector, meaning many dealers are choosing to move into a slightly higher price bracket and changing their proposition."
The Consumer Rights Act 2015 requires that anyone buying goods (such as a car), which are found to be faulty within 30 days of delivery can demand a full refund. Known as the ‘early right to reject’, this replaces earlier rules which said a vendor could merely replace or repair a faulty item or part.
A defect found after 30 days (but within six months), entitles the customer to a repair or replacement – and dealers will have only one chance at repair or replacement. If they fail, the customer is, again, entitled to a full or partial refund.
A defect is something that renders the vehicle not of satisfactory quality, not fit for purpose or not as described. A wear and tear item, or minor fault does not give the customer return/refund rights under the act.