Used car prices are now 63.7% higher than before pandemic as demand soars

The DoneDeal Motor Price Index shows that the price rise for cheaper cars is running at almost 100% compared to before the pandemic

The price of a car is now 63.7% more than just before the onset of Covid-19, with the author of new report saying the rising costs are the "canary in the coal mine for inflation in the wider economy".

The DoneDeal Motor Price Index shows that the price rise for cheaper cars is running at almost 100% compared to before the pandemic, with a knock-on impact on efforts to tackle emissions — and with many more used electric vehicles needed in the market.

Overall, car demand is down 2.4% year on year but still 12.4% above pre-pandemic levels, with supply still a major issue.

Dr Tom Gillespie, economist and author of DoneDeal's Motor Price Index, said the deficit for new cars was "still very acute", down 19% compared to 2019 levels, while used car imports are down 32.6% for the year to date, compared to the same time period last year.

Dr Gillespie, who is an environmental economist jointly associated with TCD and NUIG, suggested that prices overall are showing signs of stablisation, but that the "numerous and unprecedented shocks" affecting motor supply and demand had taken a toll.

"If the used car market can be thought of as a sign of things to come, then it surely acted as the canary in the coal mine for inflation in the wider economy," he wrote. 

Inflation

"As inflation bites in the wider economy, the cost of living coupled with increased interest rates has subdued demand.

"This consistent and considerable post-pandemic quarterly inflation in cheaper cars means that prices are now 96.9% higher than just before the pandemic.

"For a cohort of the population who can’t afford cleaner and more expensive cars, there will always be a necessity for cheaper cars. It is therefore likely that prices in the lower end of the market will continue to rise until cheaper car prices in the UK, plus tariffs, are competitive with the equilibrium level of prices in Ireland.

"From an emissions reduction perspective, this is problematic, as older cars generally emit considerably greater levels of CO2 and harmful particulates."

According to the report: "Despite the encouraging rise in new EV [electric vehicle] sales, it is unlikely that Ireland will reach its EV targets for 2030 without a significant increase in the number of used EVs in the market. The dramatic increase in the share of new EVs hasn’t translated into the second-hand car market yet, with EVs accounting for less than 1% of the used car market, a figure that hasn’t shown much sign of increase in recent months."

A number of examples were given, such as an Audi A4 2006 reg that was expected to be worth €2,315 in July of this year, but was actually worth €3,225, and the same make and model from 2017 that was expected to be worth €18,570 last July but was actually worth €25,821.

It all means that as of the third quarter of this year, prices are now 67% more than they were just before the onset of Covid-19, with the annual rate of inflation at 21% year-on-year.

According to the report, DoneDeal lists nine out of every 10 cars that are for sale in the country, with 65,000 on sale on any given day, the vast majority of which, some 49,000, are from over 1,000 trusted local dealerships