Figures show the average value of used cars rose by 2.3% in May, leaving motorists with less money to spend on their car insurance policy.
According to the British Car Auction's (BCA), it was the seventh consecutive month prices increased, with average values now 5.7% higher than 12 months ago.
The BCA believes the activity is a sign of recovery in the used car market.
BCA Communications Director Tony Gannon said; "With volumes down and demand holding up, we have recorded another increase in average value, month-on-month.
"Despite the market now heading into what is traditionally the quietest time of the year, signs suggest that average prices will be maintained at this higher level - at least while supplies of vehicles are relatively thin in the wholesale market."
Average values at used car auctions in May increased to £5,773, £132 more than the figure recorded in April.
Sales of luxury cars showed the most significant improvement, but demand for affordable transport contributed to an increase in the part-exchange sector for the sixth month running.
© Press Association 2009