The average quarterly rate of used car inflation slowed to 2.2% last year, the latest price index from car site DoneDeal shows.
DoneDeal said the annual rate of used car inflation inflation slowed to 9% in the fourth quarter of 2023, down from 10.5% in the third quarter and the lowest since 2019.
The car site said the slowdown in price inflation last year was due to several supply and demand side factors. On the demand side, the cost-of-living crisis means that big ticket items such as cars are given more careful consideration from a household budget perspective, dampening demand.
In terms of supply, DoneDeal said that wait times for new cars have reduced to more normal levels as microchip production caught up with demand in the motor industry, which eases the pressure on the almost-new used car market.
DoneDeal said that when compared to the three previous years of 2020 to 2022, price growth in 2023 eased considerably.
But despite the slowdown of inflation in 2023, prices of used cars are still 85% higher now than they were at the start of 2020, it added.
In terms of supply, DoneDeal said the number of active listings was up 21% when comparing the stock of active ads on December 1 2022 to December 1 2023.
But it noted that ad views were up just 3% in the fourth quarter of 2023 compared to the same time the previous year.
Today's report from DoneDeal showed a notable contrast in inflation between the higher and lower ends of the market.
It noted that the impact of supply and demand on inflation varies significantly when comparing lower-priced cars (less than €6,000) to higher-priced cars (more than €20,000).
In the upper echelon of the market, the fourth quarter saw a 1.1% rate of deflation, while the lower end of the market experienced a 3% increase in prices.
DoneDeal said that many people living in rural Ireland, particularly those with lower incomes, heavily depend on cars for transportation - and so demand remains relatively stable within this demographic.
"The combination of this essential demand and constrained supply due to Brexit restrictions continues to propel inflation in the lower end of the used car market. As prices persistently increase in this segment, cars become less affordable, obsolete on safety standards, and exhibit higher emissions," it added.
DoneDeal said that 121,850 new cars were registered in Ireland last year, up from 105,216 in 2022, an increase of 16%.
Imports of used cars in 2023 were up 9% to 50,717 on 2022, the first annual increase since 2019. But that was still fewer than half the number of imports compared to 2019's 113,912.
It said that Brexit restrictions continue to hit the importation of cars from the UK and the share of total imports from the UK in 2023 was just 29%, down from 96% in 2018.
Of the new registrations last year, 22,789 were EVs, an increase of 45% from the number of new EVs registered in 2022.
In the second half of 2023, EVs accounted for 19.2% of new registrations, hybrids 29.3%, Diesel 22.5%, and petrol 29%, today's report reveals.
DoneDeal said the used car market for electric vehicles and hybrids, though still relatively small (4% of total used cars for sale on DoneDeal, which equates to 3,547 cars), is expanding as the surge in new car registrations for EVs from 2020 onwards gradually influences the used car market.
Despite experiencing significant price inflation in EVs in 2022, 2023 saw a stabilising of prices for EVs in the used car market, just 2% average annual inflation for the year.
