Your car’s value is increasing by the month, a major new study shows.
Used car sales are accelerating at an unprecedented rate due to the “staggering” impact of the pandemic, Brexit and the war in Ukraine, according to Done Deal analysis.
In the first three months of the year so far, used car prices have risen by 7.9 percent compared to the previous quarter.
Over the past year, prices have risen by an average of 2.1 percent per month – that corresponds to annual car price inflation of 30 percent.
The report continues. It notes that the headline inflation number is now at 53 percent “if we compare current prices to those just before the pandemic in January 2020.”
Three examples give an insight into the extent of the price increases.
A 2009 Volkswagen Polo was worth €2,890 in January 2020. Its “actual market value” is 3,980 euros. That is a “car price inflation” of 82 percent, the analysis calculates.
A 2013 Audi A3 was worth €10,250 in January 2020 and is currently worth €12,400, a real increase of 56 percent.
And a 2015 BMW 5 Series valued at €19,450 in January 2020 now carries a €20,150 tag – an increase of 30 per cent.
Used electric car prices are up 19 percent year-on-year, and hybrid vehicle prices are up 25 percent. This is a significant increase considering that the average price for a hybrid is just over €24,000.
The lower end of the market is the hardest hit by the price increase.
This contrasts with annual inflation of 20% at the top end of the petrol and diesel market (over €18,000).
In the study by economist Dr. According to Tom Gillespie: “The pandemic, the shock to the market caused by Brexit and now the war in Ukraine have had a stunning impact on prices in Ireland.”
A major reason for the shortages leading to inflated prices is the global chip shortage, which has brought new car production to a standstill.
This means that people cannot trade in their used cars for new ones and therefore fewer used cars come onto the market.
Scarcity is driving prices up, putting used-car values under massive pressure in a market already seeing increased demand from the shift from public transport to more private cars sought-after during the pandemic.
Then comes Brexit. The report states: “In Ireland, Brexit has effectively halved the number of used cars imported from the UK. They fell from 108,083 in 2019 to 47,034 in 2021.”
Imports from the UK have been key to meeting demand as this is our closest accessible market with cars designed to be driven on the same side of the road as ours. Brexit fundamentally changed that.
Then came the war, just as lockdowns due to the pandemic were easing in early 2022 and a possible “supply readjustment” was on the horizon.
The report warned: “Now the war in Ukraine has cast doubt on the ability of global supply chains to catch up in the short term as inflation takes hold in most markets.
“Volkswagen typically produces 1,200 vehicles per day at its plants in Ukraine, and several other European car brands rely on Ukrainian-made components for production. Western car brands have also decided to halt production at Russian plants in line with the sanctions.”
Overall, an end to the price reductions for used cars does not seem to be in sight.
https://www.independent.ie/irish-news/prices-of-used-cars-soar-by-almost-8pc-in-first-three-months-of-the-year-41505529.html Used car prices increase by almost 8 percent in the first three months of the year