Used cars have increased 56% in value since the start of the pandemic
Your car is worth 56 pc more than it was at the start of the pandemic, according to a new study on Extraordinary Price Trends.
The prices of sed cars have jumped 7.7 pc since October alone.
The pandemic, an acute shortage of semiconductors for new cars and the Brexit-induced shock to the market have had “a staggering effect” on prices here, according to a special Done-Deal report.
The phenomenal level of demand is such that the report cites the bizarre example of a new used model listed with a higher price than its brand new counterpart.
This is all unprecedented and there is no sign of stopping, said report author Dr Tom Gillespie, environmental economist at NUIG.
His analysis gives the example of a 2009 Volkswagen Polo city car. It should be worth € 1,676 under normal market conditions, but it would now cost € 3,980, an 80% increase in car price inflation.
It all happens against the backdrop of several factors.
The persistent under-supply of semiconductors, a critical component of a vehicle, has taken the supply of new cars seriously.
Automakers have been forced to cut production despite strong consumer demand triggered by economies linked to the pandemic.
This has resulted in an increase in waiting lists and more people looking for new used cars.
Then there was the drop in new car sales.
New car registrations were 125,671 and 117,109 respectively in 2018 and 2019, but in 2020 and 2021 there was a dramatic drop of 20% (to 88,325 and 104,932 respectively), despite the increase in the number of cars. request.
Dr Gillespie said that longer wait times for new cars “are pushing consumers towards the used car market”.
However, the supply of used cars was also under pressure due to the onset of Brexit restrictions, which disrupted the usual flow of UK second-hand imports.
In 2019, before the start of the pandemic and Brexit, Ireland imported 108,000 cars from the UK.
That figure fell to 74,900 in 2020, the report said, while last year the total number of UK imports was 47,034, down 56% from 2019 levels.
Based on these figures, the used car deficit is estimated to be around 125,000 over normal.
The sharp decline in used cars in the UK has led to a doubling of the number of used models imported from Japan (from 3,243 in 2019 to 9,805 last year).
In previous years, the supply of used vehicles has been made easier by the glut of cars from the Celtic Tiger era. However, these vehicles quickly become obsolete.
This hits the lower end of the market the hardest, with an 83% increase in car price inflation for those valued under $ 3,000.
This contrasts with an inflation rate of 30% at the top of the market (cars valued at € 13,000 or more).
At present, the factors contributing to the massive increases in values show little sign of abating in the near term.
The report states: “The price differential between new and used cars is narrowing, and in some cases a used version of the same model is priced more than its new counterpart – an unprecedented situation.
This is good news for those looking to trade in their old cars as they are in a stronger negotiating position if they buy a new one.
However, they are unlikely to benefit much from buying new products rather than new ones, as the value of their intended purchase will also have increased, so the cost of switching may even be higher.
Elsewhere the report says 40% of those surveyed intend to buy a car this year.
Of these, 60 pc plan to trade for a purchase from a dealer and 23 pc intend to sell privately, with 19 pc having no trade.