DoneDeal Car Price Index: Used Car Price Inflation 56%
DoneDeal Motor Price Index - Q4 2021 and Outlook 2022. The Game is changing.
The Game is Changing
DoneDeal Motor Report Authored by Dr. Tom Gillespie, Economist.
Topline Highlights from the report:
As of the end of December 2021, used car prices are now 56% higher on average since the onset of Covid-19 in early 2020.
In the final quarter of 2021, prices rose by an average of 7.7%, the second-highest quarterly price rise observed since 2011, second only to Q3 of 2021’s quarterly price increase of 10.6%. So although the increase in prices is not as sharp as the previous quarter, it is still at record levels.
Consumer Demand on DoneDeal for New and Used Cars is up 80% on January 2020, the last ‘normal’ January for comparative purposes.
The deficit of used cars is in the region of 125,000 vs normal trading conditions.
In previous years the supply of used cars in Ireland was aided by the glut of Celtic Tiger year cars. However, this aging cohort of cars are rapidly becoming obsolete, hitting the lower end of the market hardest, which go towards explaining the 83% rate of price inflation in cars below €3,000 observed since the pandemic. This contrasts with a more modest 30% rate of inflation in the upper end of the market (cars worth €13,000 or more) for the same period.
Consumers looking to trade in their old cars have stronger bargaining chips as car dealers struggle to maintain their inventory.
In Ireland, the deficit of UK used cars has led to a doubling of the number of imported used cars from Japan, from 3,243 in 2019 to 9,805 in 2021.
In Ireland, the share of electric and hybrid new car registrations is rapidly increasing. In the first half of 2019, only 2.4% of new car registrations were fully electric. In the second half of 2021, that figure has quadrupled to 10.5%.
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.
Over 90% of dealer car stock is on DoneDeal. DoneDeal is the largest car marketplace in Ireland, listing 9 out of 10 cars advertised online from car dealerships in Ireland. Economist Tom Gillespie analyzed over 5m of DoneDeal’s vehicle listings from 2011-2021 using hedonic regression analysis to isolate pricing inflation associated with vehicles after controlling for mileage, age, and other vehicle attributes.
Download the full report here.