Pandemic and ‘Brexit shock’ blamed for rising used car prices
USED CAR PRICES are now nearly 50% higher than they were just before the start of the pandemic in January 2020, a survey reveals.
The report, released by DoneDeal, found that the pandemic and the “Brexit shock” had a “staggering effect on prices.”
In just three months since June 2021, used car prices have risen 10.6%, the highest quarterly used car price inflation in Ireland since DoneDeal data began in 2011.
“Not only are prices continuing to rise, but also the rate of increase appears to be accelerating and not slowing down,” the report revealed.
“DoneDeal’s Car Price Index, modeled by TCD and NUIG economist Dr Tom Gillespie, shows that depreciation and increased mileage still make cars cheaper, but overall price inflation ( due to lower supply and increased demand) overshadows this negative effect, and therefore cars increase in value for many models.
“The number of cars needed to bring prices back to ‘normal’ levels is around 110,000 additional cars based on pre-pandemic levels,” the report adds.
The study found that car price inflation appears to be much more acute in the lower end of the market, where supply is limited due to the release of end-of-life Celtic Tiger cars and Brexit reducing the number. imports.
“The stifled supply due to Brexit and the pandemic-induced delays in the production of new cars – coupled with increased demand resulting from increased savings – are widely cited as the causes of this abnormal price growth, and these contributing factors show little sign of slowing down in the short term. term.
“The pandemic and the Brexit-induced shock to the market have had a staggering effect on prices – used car prices are now almost 50% higher than they were just before the start of the pandemic in February 2020.
“Although the pandemic-induced supply shock has affected most automotive markets around the world, Ireland’s case is exacerbated due to the aggravating effect of Brexit. New trade barriers have disrupted the steady flow of British used cars into the Irish market.
“Import used car registrations are declining rapidly, from a peak of 110,000 per year in 2019 to around 80,000 in 2020, and – with only 30,000 registered so far in 2021 – this year may not see that half of the 2019 number of used cars imported into Ireland, ”the report revealed.
Demand for cars has increased, the report suggests, due to the pandemic causing increased dependence on cars.
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“For example, people leaving cities are necessarily more dependent on cars because public transport is less developed and operates at reduced capacity due to restrictions,” the report speculated.
The problem of rising costs appears to be worse in the lower end of the market, where supply is limited due to the end of life of Celtic Tiger cars and Brexit reducing the number of imports.
Inflation is lower in the top quarter of the market for cars valued at € 13,000 or more, at 3.9%.
The report says that to bring prices back to pre-covid-19 levels, 110,000 more cars are needed. Cash buyers currently represent around 50% of the market, according to DoneDeal.