Gloucester car dealer Nick Broady says second-hand car prices are soaring as buyers return to the market and manufacturers of new cars struggle to keep pace.

"There is no question about it: the used car prices have increased dramatically as new cars are not available," said Nick, who is managing director of Avenue Cars in Gloucester.

"There is a lot of pent-up demand caused by the lockdown, at a time when the supply of vehicles is limited. But of course, it also means that people can get better prices on their part exchanges.

"We are very lucky because we have long-established contacts within the industry to keep up our supply."

The surge is being fuelled by bumper demand as people avoid public transport because of the pandemic and a microchip shortage is holding back the production of new vehicles.

"The shortage of new cars and vans means that part exchanges are not being created which would normally bring them onto the second-hand market," Nick added.

Prices have jumped an average of 6.2pc in May following a 2pc rise the previous month amid a scramble to get on the road, according to research by Car Dealer magazine - the biggest increase it has ever recorded.

The problem is being further intensified by car hire companies, which normally pump large numbers of nearly new cars into the system as they refresh their fleets but are holding back from doing so as Covid hurts demand for their services.

James Baggott, editor-in-chief of Car Dealer, said: "It's incredible, we've never seen anything like this before. People just don't realise that the car parked in their drive is rising in value every day, by thousands of pounds a month in some cases."