The price of used cars continues to grow at an unprecedented rate, rising 7.9% in the first three months of 2022 and 30% over the past year, according to DoneDeal.

Used car prices have now risen 53% at the outset of the pandemic in January 2020, with inflation averaging 2.1% per month over the last 12 months, with the market shrinking due to the growing obsolescence of the high number of cars bought during the Celtic Tiger era.

The dwindling number of Celtic Tiger vehicles available has hit the lower end of the market hardest, with an observed annual rate of inflation of 36.9% for low value cars, compared to a more modest 20% inflation rate at the top end over the market over the same period.

For instance, a 2009 Volkswagen Polo worth €2,890 in January 2020 would have been expected to depreciate 42% in value in the past two years when it would actually have a value of €3,980 currently, according to analysis by DoneDeal economist Dr Tom Gillespie.

Newer cars such as a 2013 Audi A3 and 2015 BMW 5-Series that would have sold in early 2020 for €10,250 and €19,450, respectively, would have been expected to fall 33% and 26% in value to now, but their values have also risen to €12,400 and €20,150.

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Supply chain disruption caused by global chip shortages has also stalled the production of new cars, adding buyers to a used car market that was already experiencing increased demand due to the shift to remote work and reduced public transport use.

Brexit has also effectively halved the number of used cars being imported to Ireland from the UK, from 108,083 in 2019 to 47,034 in 2021, while the war in Ukraine has caused more disruption to car manufacturing, with western car brands ceasing production in Russia and stoppages at plants in Ukraine, where Volkswagen produces an estimated 1,200 vehicles daily.

Demand indicators for electric vehicles on DoneDeal rose 218% year-on-year as fuel prices continue to surge also supply has been slowed by the chip shortage, resulting in further upward pressure on prices.

Prices on DoneDeal for hybrid vehicles have risen by a quarter (25%) and a fifth (19%) for electric vehicles over the past year while petrol and diesel cars' share of the market has fallen from 79% in 2020 to 53% in the first quarter of 2022.

Figures from the Central Statistics Office (CSO) for February showed sales of new cars rose 17% year-on-year to 13,643 while the second-hand mark sunk as sales of imported used cars for the month fell 39.1% to 5,524.

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