Used car prices fall by as much as €3,300

SECOND-hand car prices have dropped for the first time in eight years, with prices at the higher end falling by as much as €3,300.

The drop in prices has come about because of changes due to come into effect in July to the costly Vehicle Registration Tax (VRT) system on cars, which will make petrol-guzzlers more costly while cars like efficient diesels will be cheaper.

Changes in the road tax system also mean owners of vehicles with higher carbon dioxide (CO2) emissions will pay higher annual road tax in future.

New figures show second-hand car prices have dropped by as much as €3,300 as dealers cut prices ahead of the changes.

Last year, a luxury car averaged €51,300 for a three-year-old model and €32,000 for a five-year-old vehicle.

Now average prices have dropped to €48,000 on newer used-cars and €30,000 on older ones, equal to falls of €3,300 and €2,000 respectively.

On smaller cars the falls are modest, with the average second-hand family car now €14,100 against €14,500 on a three-year-old model last year.

The figures came from Motor Trade Publishers, which compiles data on second-hand vehicle prices for the motor trade.

Yesterday, lender GE Money, which released the data, said the reduction in second-hand car values was the first since the year 2000 and was also partly caused by the economic slowdown.

“The market is in the final stages of the switch to the CO2-based system for VRT and road tax rates, and some dealers have already reduced prices to reflect the coming changes,” said finance house boss Nigel Rutherford.

“This is clearly good news for consumers looking to buy a used car in 2008.”

AA Ireland predicts the VRT and road tax changes will see increased demand for cheaper efficient diesels and a reduction in the number of petrol cars on the roads.

The reduction in cost of certain models from July is having a knock-on effect on the cost of second-hand model, according to the Society of the Irish Motor Industry (SIMI) trade body.

“We have seen a considerable reduction in used-car values and this is good news for people buying cars,” said SIMI director-general Alan Nolan.

He said consumers thinking about buying a used-car should act quickly as demand for certain models could pick up as the VRT change-over approaches.

Prices of certain second-hand models were falling as dealers would otherwise be left with used-cars costing more than new ones after July, said Mr Nolan.

But the change-over will also see new cars with higher CO2 emissions increase in price so second-hand models of these cars could keep their value on the forecourt, he said.