Brexit, climate-change-induced cold weather in Texas and droughts in Taiwan and even the blockage of the Suez Canal in Egypt are some of the factors that contributed to what DoneDeal's latest Used Car Price Index says is a 40% rise in the price of used cars in the space of just a year.
Cars are now holding their value for longer due to a lack of supply and intense demand, with some cars even appreciating in value.
The report cites a Volkswagen Golf bought last year as an example. The same car today, a year older, and with 20,000 extra kilometres on the odometer, is on average, 15% more expensive.
Depreciation and increased mileage is still a factor in making cars cheaper, but the overall price inflation from a decrease in supply and an increased demand is eclipsing those negative effects.
Author of the report, environmental economist Tom Gillespie from NUIG, described the behaviour of the used car market as one of the strangest “economic phenomena” to have emerged since Covid-19.
“Until the outbreak of Covid-19, the depreciation of a car's value was as much a certainty as death and taxes.
“However, in today's Irish market there is a reasonable chance that if you bought a used car this time last year it will be worth more now even with the increased mileage on the odometer,” he said.
The supply of new cars has been hit by the global factors as mentioned above, leading to the increased demand for used cars.
Brexit has placed new barriers to trade thereby disrupting the regular flow of UK used cars into the Irish market.
The cold weather in Texas, droughts in Taiwan, and plant fires in Japan have led to a shortage of semiconductors, meaning a slowdown in new car production for many brands.
The unknowns that are brought about by the pandemic may mean that used cars might hold their value for longer, especially if supply takes longer to catch up to the demand.
However, Dr Gillespie highlights that as society returns to normal, it is possible that the surging demand based on increased spending power may ease somewhat when public transport returns to regular capacity, and there are more opportunities to spend money elsewhere, such as holidays.