Your car may be worth more now than when you bought it 2 months ago

Your car may be worth more now than when you bought it

Used car prices in Ireland have increased dramatically.

The price of used cars in Ireland has risen by up to 40% in the space of a year, a new report has said.

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DoneDeal's latest Car Price Index has claimed that a variety of factors, including Brexit, climate change and the blockage of the Suez Canal, have contributed to the rise in price of used cars.

The report cites analysis undertaken by the TCD and NUIG Economist Dr Tom Gillespie, which shows that limited supply and intense demand has meant that cars are currently holding their value for longer and, in some cases, even appreciating in value.

"The increase in prices has outweighed depreciation rates for most vehicles and is having the greatest impact on the lower end of the market," the report said.

The report uses a Volkswagen Golf bought last year as an example of the price increase.

“The same car today, a year older, and with 20,000 extra kilometres on the odometer, is on average 15% more expensive,” it said.

On the demand side of things, it's thought that working from home has resulted in an increase in need for private vehicles, as has public transport operating on a reduced capacity.

Due to restrictions, it's thought that the increased level of disposable income has also had an affect on the price of used cars.

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Added to this, the supply issues caused by the pandemic have been magnified by Brexit, meaning that imports from the UK have fallen sharply from 2019 levels.

It's unclear if the price increase is a short-term matter or whether the effects will last into the future, although Dr Gillespie said that while society returns to normal, people may choose to spend their money on other things, such as holidays abroad.

"However, if supply takes longer to catch up, this growth in prices may not reverse in the near term," the report said.

"In that scenario, cars may hold their value for longer."