Brexit, Covid-19, and war combine to push used car prices to record new heights
On DoneDeal, searches for for electric vehicles increased increased 218% over the last year. File Picture
The price of used cars in Ireland increased by 7.9% during the first three months of this year — the tenth consecutive quarter in which they have risen.
According to a new report from DoneDeal, the impact of Brexit on the market, the Covid-19 pandemic and associated supply chain issues, and the ongoing conflict in Ukraine have together driven "unprecedented" price increases on used cars.
Over the past year, inflation as regards car prices has averaged 2.1% per month — amounting to an annual rate of 30%.
Compared to prices at the onset of the Covid-19 pandemic in March 2020, current prices are now up a staggering 53% overall.
Dr Tom Gillespie, environmental economist at NUI Galway and one of the report's authors, says that in previous years, the supply of cars in Ireland was somewhat buoyed by a glut of cars purchased during the Celtic Tiger.
"However, this ageing cohort of cars are rapidly becoming obsolete, hitting the lower end of the market hardest," he said.
DoneDeal's research found that the current rate of inflation for lower-value cars, those which cost below €4,000, now stands at 36.9%.
Conversely, the observed annual inflation rate for higher-priced cars, those costing more than €18,000, is now 20%.
As lockdowns lifted, the Russian invasion of Ukraine again applied increased pressure to global supply lines due to rising energy costs and ceased car component production in some countries, in line with sanctions. In Ireland, Brexit also appears to be a factor, with the number of vehicles imported from the UK falling by 56%.
Dr Gillespie says that with the supply of new EVs severely affected by the global chip shortage, the second-hand market for EVs and hybrid vehicles is also experiencing significant price increases.
On DoneDeal, searches for electric vehicles increased 218% over the last year.
On average, the price of electric vehicles rose 20% year-on-year, while the price of hybrid vehicles rose 25%.
"The used car market was one of the first markets to experience price increases due to the pandemic," Dr Gillespie said.
"Supply chain disruptions caused by global chip shortages stalled the production of new cars, putting supply pressure on the used car market which was already experiencing increased demand as a result of the shift to remote work and reductions in public transport use.
"The war in Ukraine has cast doubt on the ability of global supply chains to catch up," he said.
