The average asking price for a used car has broken through £20,000 for the first time, as the microchip shortage squeezes supplies of new vehicles.

The figure has risen by more than £4,000 in just six months, to £20,340, up 29pc from a year ago, according to Auto Trader.

The latest gain marks the 93rd consecutive week of increases as buyers fight over a limited supply of used stock and the number of new cars being made has fallen to a 65-year low in the UK.

The number of used cars sold last year grew more than 12pc, according to figures from the Society of Motor Manufacturers and Traders, although volumes are still more 6pc below pre-pandemic levels.

Auto Trader said car buyers may be insulated from some of the worst effects of the price rises if they are trading in motors which have also shot up in value.

British factories such as those owned by Nissan and Jaguar Land Rover made fewer than 860,000 vehicles last year, more than 61,000 short of the total in 2020.

Luxury car makers have had record years of production and sales, paying over the odds for microchips which have been in short supply after production disruption early in the pandemic.

Production of less profitable family cars has been sacrificed, however, despite strong demand with more commuters wanting to avoid public transport.

Big price rises came in for people carriers like the Seat Alhambra and Ford S-Max, which rose in price by more than half.

New car buyers who do not want to join waiting lists of up to a year have been opting for motors which are less than a year old.

This has crowded the market for nearly-new cars, sometimes pushing prices above those of production line-fresh models, helping send average sale prices higher.