However, they are expected to stabilise soon.
Car prices are notably rather expensive at the moment, following a significant price spike in the past couple of years.
As of the close of the second quarter of 2022, prices are currently estimated at a whopping 63.7% more than they were just prior to the onset of the Covid-19 pandemic in early 2020.
Prices for used cars, meanwhile, soared by 29%.
The data comes from DoneDeal's latest
Car Price Index, which signals a consecutive rise of 5.9% per quarter. In the years before the pandemic took hold, the average quarterly rate of inflation was just 0.8%.
One eyebrow-raising real-world example focused on a 2017 Audi A4, priced at €23,354 in July of 2021. The expected value placed on the same vehicle for July of 2022 was €18,570. However, the actual price came in at €25,821 – a difference of 11% on its original value.
"If the car market can be thought of as a sign of things to come, then it surely acted as the canary in the coal mine for inflation in the wider economy," notes Dr Tom Gillespie, who authored the report.
Gillespie points to a series of "numerous and unprecedented shocks" felt by the Irish car market, brought on not just by the pandemic, but also by Brexit and global component shortages.
A lack of supply coupled with the backdrop of increased demand associated with pandemic savings has brought us to this point of escalation. Demand is actually down 2.4% year on year – you can blame the cost of living crisis for this – yet still stands 12.4% 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% vs 2019 for the first six months of the year – year on year, it is up slightly at 2.1% for the first six months," said Gillespie.
Used car imports are down 32.6% for 2022 so far compared to the same time last year. According to the report, the new balance between supply and demand has led to a slowdown of inflation to the amount of 3.9%. As a result, Gillespie said that overall price volatility may finally be stabilising.
"This absolute average rate of inflation masks the dichotomy between the two ends of the car market, cars worth €6,000 or less, the quarterly rate of inflation of 7.3% broadly in line with the average quarterly inflation of 8% over the past two years."
