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Used car prices jump by almost 70% - due to pandemic, Brexit and Ukraine - report says

In particular, used cars in the lower end of the market are becoming less affordable despite being lower in safety standards and higher in emissions.

THE PRICE OF used cars in Ireland has jumped by almost 70% since before the Covid-19 pandemic, according to a new report.

Used cars in the lower end of the market in particular are becoming less affordable, despite being lower in safety standards and higher in emissions.

In the last quarter of 2022, the prices of cars being sold on DoneDeal were 69.7% higher compared to the onset of the Covid-19 pandemic in February 2020.

When comparing prices now to this time last year, they are 16.2% higher, according to the latest DoneDeal Car Price Index.

In the lower end of the market (cars costing less than €6,000), prices rose by 4.7% in the last three months of 2022.

However, in the upper end of the market (cars costing over €20,000), Q4 saw a 1.1% rate of deflation. This is the first time that deflation has been observed in the price index for this end of the market since Q1 2020, just before the onset of the pandemic.

The report, which was compiled by economist Dr Tom Gillespie, notes that the “lingering effect” of the pandemic microchip shortage, coupled with Brexit and the outbreak of war in Ukraine “caused significant disruption to both the supply of, and the demand for, used cars”.

unnamed DoneDeal Car Price Index DoneDeal Car Price Index

In the first nine months of 2022, used car prices rose by an average quarterly rate of 4.7%. Despite expectations of a slowdown in price inflation in Q3, it remained strong at 3.5%.

However, in the last three months of 2022, it seems that price inflation has finally slowed to a more ‘normal’ level as the quarterly rate of price inflation in the last quarter of 2022 was 1.4%, the lowest rate of inflation seen since Q3 2019.

On DoneDeal, the number of active listings is up 19% when comparing the stock of active ads on 1 January to 1 December 2022, suggesting a slight recovery in supply.

unnamed DoneDeal Car Price Index DoneDeal Car Price Index

In the last three months of 2022, consumer demand fell by 17% quarter on quarter, which is largely in tune with the observed slowdown in price inflation.

“On the demand side, the cost-of-living crisis inevitably means that big-ticket items such as cars are given more careful consideration from a household budget perspective, dampening demand,” the report notes.

Safety standards

As car production catches up with demand, newer used cars are less in demand from consumers who have a preference for straight-from-the-factory-floor cars, the report notes.

The report states that, for the lower end of the market, so-called Celtic Tiger cars (made from the mid-1990s to the mid-2000s) are “rapidly becoming obsolete”.

Replacing the supply of older and cheaper cars “can only come from overseas”.

unnamed (1) DoneDeal Car Price Index DoneDeal Car Price Index

The report notes: “For many people who live in rural Ireland and are in the lower end of the income distribution, there is a strong reliance on a car for transport, therefore demand does not fluctuate much for this cohort.

“Coupling this necessary demand with choked supply due to Brexit restrictions, means that inflation in used cars continues to be driven by the lower end of the market.

“As prices continue to rise in the lower end of the market, cars are becoming less affordable, lower in safety standards, and higher in emissions.”

Electric cars

Under plans discussed by Cabinet yesterday, high-powered electric vehicle chargers will be installed every 60 kilometres along all main road networks.

The EV Charging Infrastructure Strategy 2022–2025 and Greater Dublin Area Transport Strategy sets out a roadmap for the delivery of Ireland’s publicly-funded charging infrastructure over the next three years.

The strategy provides €100 million in funding for the new public-charging infrastructure. It will be rolled out to complement home charging, which currently accounts for the vast majority of charging.

The aim of the new public infrastructure is to assure car users of the feasibility of switching to an electric vehicle over the coming years.

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