Price of used cars up 56% — here's why your car is increasing in value
An increase of 7.7% in used car prices is among the trends detected in the DoneDeal car price index. File picture: Handout/PA
Car dealers have accused the Government of steering the used car market to a point where prices are now 56% higher than the start of the pandemic.
That figure is quoted in the latest DoneDeal car price index which says Covid restrictions and Brexit disruption have contributed to the surge. Its data shows used car prices have risen by 7.7% since last October alone.
That final quarter increase was the second-highest quarterly price rise observed since 2011, only less than the third quarter of last year which saw a 10.6% increase.
The used car price inflation rate here has outstripped the rate in the UK, which is running at 33% for the same period, and the US rate, which has topped 47%.
The report provides three examples of used cars which have all seen their value increase since early 2020, including:
- A 2009 VW Polo, which was valued at €2,890 in January 2020 but which is now valued at almost €4,000;
- A 2013 Audi A3 which was €10,250 two years ago which is now valued €12,400;
- A 2015 BMW 5-Series, which was €19,450 this time two years ago, but which is now valued at €20,150.
Tom Gillespie, an environmental economist and author of DoneDeal's Motor Price Index, said supply chain disruption caused by the pandemic and Brexit combined to create a perfect storm for used car price inflation.
He said consumer demand for both new and used cars from car dealerships is also at an all-time high — up 80% on January 2020.
Last year's persistent undersupply of semiconductors, a crucial component in new cars, forced car manufacturers to cut back production. With soaring demand boosted by pandemic savings, consumers turned to the used car market, where supply was also under strain.
The index shows that the price gap between new and used cars is not just tightening — in some rare cases, a second-hand version of the same model is being listed at a higher price than its new counterpart.
However, Denis Murphy, managing director and joint owner of Blackwater Motors in Cork, said he hadn’t seen any evidence of that. He blamed the government for the surging prices, and said policy decisions, combined with the supply shortage, have led to the current situation:
"Until they reduce VRT to make cars affordable, things will continue like this.”
The flow of used cars from the UK has dropped from 108,000 in 2019 to 47,034 last year. There has been a surge in the number of imported used cars from Japan, from 3,243 in 2019 to 9,805 in 2021.
In early 2019, only 2.4% of all car registrations were fully electric, but that quadrupled to 10.5% by the end of last year.
Mr Gillespie said: “70% of people surveyed as part of a study accompanying the price index said they plan to buy electric within the next five years. As the motor industry adapts to these fundamental changes, so too should government policy.”
