Car dealers are warning that the price of buying a car could jump by €1,000 from next July.
The Irish Motor Industry warning comes as the Finance Minister is being advised to radically overhaul Ireland's motor taxation system.
His Department's Tax Strategy Group is behind the advice, and wants to see changes in an effort to clamp down on emissions from petrol and diesel cars.
The advice for the Minister also says market sentiment has turned strongly against diesel vehicles in the UK due to anti diesel measures introduced by the government there.
This means Ireland is a "convenient outlet" for used diesel cars coming from the UK.
Brian Cooke, Director General of the Society of the Irish Motor Industry, says the proposed changes would push up the cost of buying a car by between €700 and €1,000.
Paschal Donohoe will have to decide on the reforms in time for October's budget