An increase in used car prices is likely to take years to even out.

That is according to Shane O'Donoghue, editor with completecar.ie.

He was speaking to The Pat Kenny Show after a new study found prices are now 67% higher than they were just before the onset of COVID-19.

The latest DoneDeal Car Price Index also shows that the annual rate of inflation at 21% year-on-year.

Shane said there are several factors to this.

"It's quite an astounding situation and terrible for people that need a second-hand car for their commuting or for their work," he said.

"It all started way, way back and COVID was definitely the start of the whole thing, where car factories were shut down and there was no demand for new cars.

"It's the new car supply that is indirectly affecting all of us."

A shortage in semiconductors is exacerbating the problem. Picture by: Andriy Popov Alamy Stock Photo

Even when production resumed, there was a shortage of raw materials, he said.

"Since then, production has obviously started back up, but we've had a massive semiconductor shortage around the world and that is particularly affecting the car manufacturers.

"The long-shot is that, because there's less new cars available to the market, it means there are more people, for instance, that want to change their car going for a nearly-new car.

"Those people, who would have previously gone for a nearly new car, are going for a slightly older car.

"Effectively it's just increasing the values, and it's all about supply and demand".

Lack of UK supply

Shane said it will likely be years before the market returns to normal.

"This is going to take, I guess, a few years before things even out properly.

"The invasion of Ukraine isn't just the only point here... the semiconductor supply issue isn't only affected by that - that is a problem around the world.

"There are some signs of it improving, but when supply of new cars gets back to where it was, it's still going to take a while before there's enough used cars to sate demand.

"The other factor here of course is the lack of cars coming in from the UK - we used to have tens of thousands of used imports from the UK previously, and that's not happening now at all," he added.