The Covid-19 pandemic and Brexit are two factors that have led to 56 per cent increase in used cars asking prices.
According to online marketplace DoneDeal, in the last three months of the year, the inflation rate for used cars grew a further 7.7%, the second highest quarterly price rise since 2011.
This means that on average, asking prices for used cars are now 56 per cent higher than they were before the Covid-19 pandemic arrived in Ireland in 2020 (this also compares to similar rates of 47 per cent in the US and 33 per cent in the UK).
According to DoneDeal, the extreme inflation means in some cases a second-hand version of the same model of a car is being listed for a higher price than a new one.
At 83 per cent, price inflation has been particularly high in the cheaper end of the market.
Previously, the shortfall in second hand cars in the Irish market had been made up by imports from the UK, but this has changed since January of last year, as a result of Brexit having made UK imports far more expensive, thus reducing the incoming supply.
Prior to the pandemic and Brexit, 108,000 cars a year were imported from the UK, however, this fell to 74,900 in 2020 and 47,034 last year: a drop of 56 per cent from 2019 levels.
DoneDeal added that deficit has led to a doubling of used cars imported from Japan.
TCD and NUI Galway environmental economist Dr Tom Gillespie told RTÉ's Morning Ireland programme that he analysed 5 million DoneDeal vehicle listings from 2011 to last year as part of the research, and estimates that there are still around 125,000 fewer used cars available compared to pre-pandemic times.
Gillespie said: "We have a slowdown in the production of new cars... if there is a long waiting list for new cars, people are incentivised to turn to the used car market.
"There's also an increase in demand due to more reliance on cars since the pandemic and that's just created this perfect storm for use car inflation: this is happening in the UK, in the US and other markets around the world, but in Ireland this has been compounded by the manifestation of Brexit."
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