Used car prices still up 85% despite 'considerable ease' in inflation

Quarterly rate of inflation slowed to just 2.2% with DoneDeal noting noticeable moderation amid era of sharp price rises

On the demand side, the report found that the cost of living crisis had put a dampener on consumer spending, leading to a fall in prices.

Used car prices are still 85% higher now than they were at the beginning of 2020, despite a "considerable easing" in price growth throughout 2023. 

In its latest car price index, DoneDeal said the era of sharp price inflation "moderated noticeably" last year, with the average quarterly rate of inflation slowing to just 2.2%.

In annual terms, the rate of inflation slowed to 9% in the fourth quarter of 2023, the used car site said, down from 10.5% in the previous period. 

Despite a notable ease in price pressures, however, used car prices are still significantly higher than they were four years ago at the beginning of the pandemic. 

On the demand side, the report found that the cost of living crisis had put a dampener on consumer spending, leading to a fall in prices. This was compounded by modest growth in ad views, which increased by just 3% annually in the final quarter of 2023.

In terms of supply, DoneDeal said that wait times for new cars fell to normal levels following an increase in microchip production, easing pressures on the almost-new used car market. On its website, DoneDeal said the number of active car listings was up by 21% annually.

The report also noted a "notable contrast" in inflation between the higher and lower ends of the market, with the upper echelon of cars experiencing deflation of 1.1% in the last three months of 2023.

On the flip side, however, cars on the lower end saw prices increase by 3% in the same period, which was propelled by supply constraints as a result of Brexit combined with steady demand among lower-income individuals living in rural areas. 

EV prices stabilise

Despite significant price inflation among electric vehicles (EVs) throughout 2022, 2023 saw prices stabilise across the used car market, posting an average of 2% inflation annually. 

The report also noted that price reductions for certain new electric vehicle models began to affect the used EV market toward the end of 2023, with prices for used EVs declining by 4% in Q4 2023.

EVs still account for just 4% of total used cars for sale on DoneDeal, equating to just over 3,500 cars, however, the second-hand site said the share of EVs is expanding as new car registrations from 2020 gradually influence the used car market.

Imports of used cars in 2023 also climbed 9% to 50,717 compared to the previous year, the first annual increase since 2019. However, DoneDeal noted that this was still fewer than half the number of imports compared to 2019’s 113,912, with Brexit restrictions continuing to hamper the importation of cars from the UK. 

Despite the increase, the share of total imports from the UK in 2023 was just 29%, down significantly from 96% in 2018.