Car buyers are facing the perfect storm. Used car prices are soaring, while there are long delivery delays for new cars. This is against a backdrop of ever-increasing fuel and energy charges.
First there was Brexit, which pushed up the cost of importing a used car from Britain. Then came Covid, during which the motor industry badly misjudged its supply needs, particularly for microchips. The supply problem has been exacerbated by war in Ukraine, home to several key component suppliers. The result: lengthy delays for new car deliveries.
While the impact of the pandemic and the Ukraine war may pass in time, the long-term reality remains a shortage of used car stock in the State. It’s estimated that 7.4 per cent of the national fleet is scrapped or written off each year. With 2.2 million private cars on our roads at the end of 2020, that equates to an annual replacement of 162,800 cars. Yet new car registrations have not exceeded 150,000 any year in the last decade. Previously, the deficit was filled by used imports, but Brexit has made this a very costly option.
To add to motorists’ woes, new car prices are only going one way, thanks in part to the costs of ever more complex technology, both in terms of safety and power supply.
The reality is that even with a return to normal new car supply, the used market is relying on Irish new car buyers to feed supply and those volumes are not significant enough to compensate for the loss of affordable used imports that traditionally kept prices in check.
Brexit remains the biggest barrier to a return to affordable used car prices here. Some suggest used prices will only level off when they reach the equivalent of the cost of importing from the UK after duties and tax.
Commentators may suggest alternative modes of transport as an option, but for those in need of a car the chances of falling prices seem slim. There doesn’t seem to be a quick fix to car price inflation and it will mean more of the household budget is tied up in the family car.