After several quarters of higher-than-expected inflation, price growth in the second-hand car market has eased as cost-of-living pressures curb demand.
A combination of undersupply and increased demand for used cars last year – driven by microchip shortages, Brexit and the outbreak of war in Ukraine – saw prices rise at an average quarterly rate of 4.7 per cent in the first nine months of 2022. However, the latest figures from car website DoneDeal suggests that price inflation slowed to just 1.4 per cent in the final quarter of last year, the lowest rate of inflation seen since the third quarter of 2019.
The company also reported a 17 per cent fall-off in listings in the final quarter, which it said was “in tune with the observed slowdown in price inflation”.
Despite the slowdown prices were still 69.7 per cent higher compared to the onset of the Covid-19 pandemic in February 2020, and 16.2 per cent higher than a year ago.
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DoneDeal’s latest car price index noted the number of active listings on its website was up 19 per cent when comparing the stock of active ads posted at the start of 2022, “suggesting a slight recovery in supply”.
In the upper end of the market (cars above €20,000) the company recorded negative price growth or deflation of 1.1 per cent. This was the first time that deflation has been observed in DoneDeal’s price index since the first quarter 2020, just before the onset of Covid.
“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,” said economist Tom Gillespie.
“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.”
