The price of a used car is now nearly 70% more expensive than before the Covd-19 pandemic after costs continued to climb for the last three months of last year, a study shows.
But a report from DoneDeal showed prices are beginning to stabilise and revealed the rate of inflation between October and December was just 1.4% - the lowest level since 2019.
A second-hand car is now 16.2% more expensive than it was last year and 69.7% higher than in February 2020 - a month before the pandemic began.
Author of the DoneDeal Price Index and economist Tom Gillespie said: “The inevitable slow down in price inflation at the end of 2022 could largely be attributed to several supply and demand side factors.
“In terms of supply, wait times for new cars have started to reduce as microchip production slowly catches up with demand in the motor industry, in turn, this eases the pressure on the almost-new used car market.”
Mr Gillespie said the cost-of-living crisis had made people consider “big-ticket items” such as a car more carefully.
He said demand fell by 17% between October, November, and December.
The economist also revealed cars valued at more than €20,000 saw prices fall by 1.1% during the final quarter of last year for the first time since early 2020.
He believes this is down to a drop in demand for good second-hand cars as the production of new cars ramps up.
Mr Gillespie added: “On the demand side, the cost-of-living crisis inevitably means that big-ticket items such as cars are given more careful consideration from a household budget perspective, dampening demand.
"In-depth analysis of ad view trends on DoneDeal gives an insight into consumer demand over the past year.
"In the last three months of 2022, demand fell by 17% quarter on quarter, which largely is in tune with the observed slowdown in price inflation."
Giving a real world example, he used an Audi A4 from 2017 and showed the price was €23,022 in December 2021.
He said it should have been valued at €19,362 last month but the actual value was €23,537.
But Mr Gillespie said one category which hasn’t seen a fall in prices was cars worth under €6,000 which are now 117.4% more expensive than when the pandemic began.
The economist said Brexit was making the situation worse because fewer vehicles were being imported from Britain.
He added: "For the lower end of the market the Celtic tiger year cars are rapidly becoming obsolete, and replacing the supply of older/cheaper cars can only come from overseas.
"For many people who live in rural Ireland and are in the lower end of the income distribution, there is a strong reliance on a car for transport, therefore demand does not fluctuate much for this cohort."
