Repairers have been warned that they may face a slump in business over the next 12 months if the Government forces carmakers to reduce UK prices.

Norton Consulting managing director Eddie Longworth believes lower prices will raise the number of write-offs. He said: “If - or rather when - new car price reductions hit home, insurers' total loss costs are going to go up soon afterwards. We are already seeing dealer groups launching internet-based sales with discounted prices. “While cars become cheaper, the cost of repairing damage doesn't.”

Insurers would need to look at remunerating bodyshops for handling written-off vehicles or accept low-cost smart repair methods.

While an increase in write-offs would not in itself put bodyshops out of business, it could act as a spur to continued consolidation in the industry, said Mr Longworth.