The Motor Trade Association says the rise of GST to 15% has led to a drop in new and used cars being sold in October.
Sales of new cars were down 8.1% and used car sales dropped 6%, compared with September.
MTA spokesperson Ian Stronach says strong pre-increase sales in September were always going to result in a sales dip in October and the industry had factored this in.
For the year to date, sales of new and used vehicles have increased by 13% and 34% respectively, he says.
The association says it expects the market will now return to more normal trading patterns.