Virgin Cars has criticised the SMMT for painting a “false doomsday scenario” on the future of Block Exemption, which, it says “adds nothing intellectually to the debate”.

The SMMT has published a report claiming that consumer complaints would soar if block exemption is scrapped.

It says that the ending of block exemption will create a "free-for-all market place" where sales from car supermarkets and unregulated web retailers threatens to create a pool of unhappy customers.

The SMMT is already concerned by a rising tide of complaints about companies that currently operate outside the block exemption and warns matters will only worsen if the motor industry's block exemption is scrapped.

SMMT chief executive Christopher Macgowan said there have been many complaints from customers including misleading prices, lost deposits and poor aftersales service. "This is just a snapshot of life without franchised dealers," he said.

But Virgin Cars' CEO Ian Lancaster said: “Horror stories of misled car buyers who have lost money, unknowingly bought non-UK specification cars or had the surprise of being asked to stump up extra money, exist as a result of opportunist profiteers who do not have the customers interest at the heart of their business. Virgin Cars is one of just a few companies that do it right, and our advice is buy from the company and people you trust, and provide the service and value that you want – and that applies to dealers, supermarkets or importers.”

And Broadspeed MD Simon Empson said: "A free-for-all market place would reduce UK car prices to levels comparative with other EU countries. It would also slash manufacturer profits.

“If EU car prices were brought into line, there would be no need to order from a LHD country and therefore no need for large deposits." He also said that with free insurance, subsidised finance and cash-back schemes, it is the franchised dealer who is "misleading" customers.

He also pointed out that consumers buy online because it is quick, efficient and easy to save large sums of money.