There has been a 30.6% increase in the number of UK motor traders (new and used car dealers) becoming insolvent during the first half of 2006, according to research company Experian.

There have been 161 insolvencies so far this year, which Experian said represents the highest increase suffered by the industry in six years.

Experian's automotive division managing director Rob Whalley said: "The year has started with the biggest increase in business failures the industry has seen in years. This is despite a big increase in used car sales in the first quarter of this year.

"In the last three years new model launches have increased by 30% so more and more new car models are now entering an already very crowded used car market. With more cars on the market than there is demand, consumers can afford to shop around for the most competitive prices, as the industry struggles to reach profit margins as residual values fall."