Car prices 64% higher than pre-Covid, report finds

James Cox

Car prices are now 63.7 per cent more than they were just before the onset of Covid-19, with the annual rate of inflation at 29 per cent year-on-year, according to DoneDeal's Car Price Index.

The report, by economist Dr Tom Gillespie, also found prices showed signs of stabilisation.

In the two years since the pandemic began, prices rose consecutively by an average of 5.9 per cent per quarter.

In the two years prior to the pandemic, the average quarterly rate of inflation was just 0.8 per cent. As of Q2 2022, prices are now 63.7 per cent more than they were just before the onset of Covid-19.

An analysis of demand related metrics on DoneDeal indicates that car demand is down 2.4 per cent year-on-year but still 12.4 per cent above pre-pandemic levels. On the supply side, "although the deficit for new cars is still very acute when compared to pre-pandemic levels" (-19 per cent vs 2019 for the first six months of the year), year-on-year it is up slightly at 2.1 per cent for the first six months.

Used cars

However, used car imports are down 32.6 per cent for the year to date, compared to the same time period last year. This new balance between supply and demand has meant that the rate of price inflation has slowed somewhat to 3.9 per cent in Q2 2022, "thus giving signs that the price volatility in the overall market for used cars might at last be stabilising".

The report states: "This absolute average rate of inflation masks the dichotomy between the two ends of the car market. When we look at the equivalent figures for the lower end of the market, cars worth €6,000 or less, the quarterly rate of inflation is 7.3 per cent, broadly in line with the average quarterly inflation of 8 per cent over the past two years."

This means cheaper cars are now 96.9 per cent more expensive than they were pre-pandemic, while cars in the price range over €19,000 rose by 1.5 per cent in the second quarter of 2022.