A Sydney used car dealership has had its trading licence suspended and three more could face disciplinary action over allegations of odometer tampering.

Dream Car City at Haberfield had its licence suspended on the spot when police raided the dealership this morning.

Master Cars at Blacktown, as well as Edward Lee Imports and Prestige Auto Centre at Concord, were issued with notices to show cause as to why they should not face disciplinary action.

It follows a two-year investigation by NSW Police and Fair Trading that identified about 100 imported used cars that had their odometers illegally wound back before being sold to customers.

Fair Trading Commissioner Rod Stowe said charges were expected to be laid for a number of offences, including fraud, odometer tampering and misleading advertising.

"For consumers, odometer readings are an important way of determining the value of a motor vehicle," Mr Stowe said.

Fair Trading NSW officers inspect a vehicle at Edward Lees Imports in Sydney. ( AAP: Paul Miller )

"So when odometers are wound back clearly it's misleading consumers about the wear and tear on that vehicle, so it's a very serious offence."

All of the vehicles identified as part of the investigation were used cars imported from Japan.

Detective Superintendent Murray Chapman from the Property Crime Squad said the investigation was ongoing and further raids and arrests were likely.

"Anybody who even contemplates being involved in this as a dealer is risking their licence," Detective Superintendent Chapman said.

"They risk being investigated and they certainly risk being arrested and charged by the NSW Police."