USED CAR PRICES are now nearly 50% higher than they were just before the beginning of the pandemic in January 2020, a survey reveals.
The report, published by DoneDeal, found that the pandemic and “Brexit-induced shock” has had a “staggering effect on prices”.
In just three months since June 2021 used car prices have increased by 10.6%, the largest quarterly price inflation seen in used car prices in Ireland since the start of the DoneDeal data in 2011.
“Not only are prices still increasing but also the rate of increase appears to be speeding up, not slowing down,” the report found.
“DoneDeal’s Car Price Index, modeled by TCD and NUIG economist Dr. Tom Gillespie, shows that depreciation and increased mileage is still making cars cheaper, but the overall price inflation (from decreased supply and increased demand) is eclipsing that negative effect, and therefore cars are appreciating in value for many models.
“The number of cars required to bring prices back to ‘normal’ levels is in the region of 110,000 additional cars based on pre-pandemic levels,” the report added.
The study found that the Car Price inflation appears to be much more acute at the lower end of the market where supply is constrained due to fall out of the end of life Celtic Tiger cars and Brexit reducing the number of imports.
“Choked supply due to Brexit and pandemic-induced delays on the production of new cars - coupled with increased demand from increased savings – are widely cited as causes of this abnormal price growth, and these contributing factors are showing few signs of abating in the short term.
“The pandemic and Brexit-induced shock to the market has had a staggering effect on prices – used car prices are now nearly 50% higher than they were just before the onset of the pandemic in February 2020.
“Although the pandemic-induced supply shock has affected most car markets globally, Ireland’s case is exacerbated due to the compounding effect of Brexit. New barriers to trade have disrupted the regular flow of UK used cars into the Irish market.
“Imported used car registrations are declining fast from a peak of 110,000 per year in 2019 to about 80,000 in 2020, and – with only 30,000 registered so far in 2021 – this year may see only half the 2019 number of used cars being imported into Ireland,” the report found.
Demand for cars has increased, the report suggests, due to the pandemic causing an increased reliance on cars.
“For example, people moving out of cities are necessarily more reliant on cars as public transport is less developed and operating at a reduced capacity due to restrictions,” the report speculated.
The problem of increasing costs appears to be worst at the lower end of the market where supply is constrained due to end-of-life Celtic Tiger cars and Brexit reducing the number of imports.
Inflation is lower in the upper quarter of the market in cars worth €13,000 or more, running at 3.9%.
The report said that to bring the prices back to pre-covid-19 levels there is a need for 110,000 additional cars. Cash buyers make up around 50% of the market at present, DoneDeal says.
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