The rate of inflation in the used car market was 3.3% in the period from July to the end of September, up from 0.9% in the previous quarter.
The DoneDeal Car Price Index shows the annual rate of car price inflation is now at its lowest level since the start of the Covid-19 pandemic, when it hit 10.5%.
Author of the report, economist Tom Gillespie, said it is now clear that the price inflation experienced in the used car market here, which had been driven by the pandemic and Brexit, is starting to subdue.
“The imbalance between supply and demand over the past few years appears to be turning a corner to a more moderate equilibrium,” he said.
“Having said that, there is still a way to go, in terms of supply, before price inflation returns to pre-pandemic levels.”
Mr Gillespie attributed the jump in inflation during the last quarter to the bi-annual registration plate change at the start of July.
This led to a 2.4% increase in demand, which helped push used car prices higher.
“Supply on DoneDeal has become healthier in the past year, and has been growing by an average of 5.4% in the past three quarters,” Mr Gillespie said.
“However, Brexit restrictions continue to affect the lower end of the market more so than the upper end of the market.”
Inflation at the lower end of the market involving vehicles priced at under €7,000 was 4.3% during the third quarter, while at the upper end over €21,000, prices were rising at just 1.6%.
Mr Gillespie said the pricing moderation has been assisted by growing supply in the new car market, which rose 12.6% between July and September.
“In Q3, there were 40,870 new cars registered in Ireland, compared to 36,288 in the same three month period last year,” he said.
“Motor production in 2023 has started to overcome supply chain issues which means shorter wait times for new models.”
The level of used car imports during the third quarter was relatively static compared to the same period in 2022, at 13,313.
Just over a quarter of those vehicles originated in the UK, down from 95% in the same period of 2018, before Brexit changes.
The share of electric and hybrid vehicle registrations continues to grow at unprecedented rates, Mr Gillespie added.
7,408 new EVs were registered in Ireland during the third quarter, a 22% increase compared to the same period last year.
This is starting to have an impact on the used car market, the report claims, with EVs and hybrids now making up 2.3% of stock on DoneDeal.
The growth in supply is bringing prices down, with used EV asking prices falling 2.6% over the last quarter and 7.1% year on year.
However, used hybrid vehicle prices continued to climb by 1.1% during the third quarter compared to the previous one and 6.5% year on year.