INTEREST IN ELECTRIC vehicles on online car marketplace DoneDeal peaked earlier this month as the cost of fuel soared.
Increases in the price of oil due to Russia’s war on Ukraine saw and diesel temporarily surpassing €2 per litre at petrol stations earlier this month, a record high.
Alongside the rise in fuel costs, demand indicators for electric vehicles on DoneDeal increased by 218% year-on-year, while demand for hybrid vehicles rose 30%.
DoneDeal, which says its listings include more than 90% of dealer car stock advertised for sale in Ireland, has published its latest analysis of car prices.
In the first three months of 2022, used car prices increased by 7.9% quarter on quarter, – the tenth quarter of price increases in a row recorded by DoneDeal.
Compared to the start of 2020, before the pandemic, prices have risen by 53%.
They have risen an average of 2.1% per month, amounting to a 30% annual rate of inflation.
DoneDeal partly attributes some of the rise to the number of used cars on the market from Celtic Tiger years falling away.
“In previous years the supply of used cars in Ireland was aided by the glut of Celtic Tiger year cars,” it observed.
“However, this ageing cohort of cars are rapidly becoming obsolete, hitting the lower end of the market hardest, with an observed annual rate of inflation of 36.9% for low-value cars.
“This contrasts with a more modest 20% rate of inflation in the upper end of the market for the same period.”
The Covid-19 pandemic and Britain’s departure from the EU also influenced the rise in prices.
“Supply chain disruptions caused by global chip shortages stalled the production of new cars, putting supply pressure on the used car market which was already experiencing increased demand as a result of the shift to remote work and reduction in public transport use,” DoneDeal said.
“In Ireland, Brexit effectively halved the number of used cars being imported from the UK, our nearest accessible car market who share the same side of the road as us.”
Used cars imported from the UK fell from 108,083 in 2019 to 47,034 in 2021, a drop of 56%, according to the Society of the Irish Motor Industry.
“Prices in 2020 and 2021 continued to rise on a monthly basis.”
Electric vehicles
Looking ahead, Russia’s war on Ukraine has put the ability of global supply chains in the car market in doubt.
Additionally, the sharp rise fuel costs appeared to have sparked additional interest in electric vehicles.
“Volkswagen usually produces 1,200 vehicles a day in their plants in Ukraine, and several other European car brands rely on Ukrainian produced components for production. Western car brands have also decided to cease production in Russian plants in line with sanctions,” DoneDeal said.
“The conflict in Ukraine saw the price of US crude oil jump to a 13-year high of US$130 on 6 March 2022. It has come down but has been trading above $110 since 17 March.
“That’s over 60% higher than it was in mid-December, before fears of a Russian invasion began to mount. This acute price increase in oil saw a litre of petrol/diesel going beyond €2 for a time in petrol stations across Ireland, a record high.
“A temporary reduction in stamp duty brought it back below the €2 mark but it didn’t stop consumers giving serious consideration to cars with lower running costs.”
Demand indicators for electric vehicles on DoneDeal increased by 218% year-on-year and by 30% for hybrid vehicles.
“With supply of new EVs severely affected by the global chip shortage, the second-hand market for EVs and hybrid vehicles is experiencing a resulting upward pressure on prices,” DoneDeal said.
“On DoneDeal, prices for used hybrid vehicles have increased by 25% year-on-year (19% for EVs). This is a significant increase considering the fact that the average price for a hybrid vehicle is just over €24,000 in the DoneDeal dataset,” it said.
“The upper end of the market for petrol and diesel cars (cars above €18,000) has seen prices rise by 20% year-on-year. Petrol and diesel market share is down from 79% in 2020 to 53% in Q1 2022 for new vehicles (SIMI).
“The quarterly rate of inflation for cheaper cars (less than €4,000) is down to 9% from a high of 10.1% in the previous quarter, perhaps reflecting consumer shift away from older and more costly to run cars to more efficient new models.”
Nationally, the government has set a target of having one million electric vehicles on the road by 2030 as part of efforts to reduce greenhouse gas emissions.
Burning fossil fuels is a key driver of human-caused climate change.
Private car transport fuelled by petrol or diesel contributes more emissions per person to the atmosphere than public transport like buses or trains that can carry a large number of passengers or zero-emissions modes of transport like walking and cycling.
The transport sector will likely be asked to cut its emissions between 42% and 50% by the end of the decade, according to targets in the Climate Action Plan 2021 that are due to be finalised later this year.
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