After a gradual decrease in car insurance premiums from 2017 to 2023, prices are now on the rise, and customers are noticing. With costs set to continue to rise, how could this impact demand for cars in future? As a car dealer, how can you navigate this potential issue and come out on top? We’ve covered all the bases, so you don’t have to.
Why Is Car Insurance On The Rise?
How Does A Rise In Car Insurance Costs Impact Car Dealers?
How Dealers Can Excel In A Tricky Situation
Why Is Car Insurance On The Rise?
Car insurance is now up 11% against the year before, and much of this comes down to increasing repair costs, a growing number of claims, and a rise in road accidents. Although an 11% rise (around €67 since 2022), 9% of this increase came in the first half of 2024 alone, suggesting future rises are on the cards.
(Source: https://mtod.ie/2025/05/07/motor-insurance-costs-rose-by-9-in-first-half-of-last-year/)
With a growing number of insurance claims and potential payouts on the horizon (the Judicial Council recommended a 17% rise in personal injury awards), further insurance premium hikes are just around the corner.
Electric vehicles (EVs) play a part too. EVs are typically more expensive to repair due to expensive technology that isn’t readily available for purchase. This makes insurance more expensive for these cars, as insurers look to guard against potential high pay-outs when an accident occurs.
Another factor is manpower: there are simply not enough repairmen ready to serve customers. As with any industry, a shortage in supply, combined with high demand leads to price rises, and the cost of repairs in Ireland is no different. This price rise then has a knock-on effect for car dealers looking to maximise sales.
How Does A Rise In Car Insurance Costs Impact Car Dealers?
While rising car insurance doesn’t directly affect car dealers, it does have potential effects that come down the line in the customer journey. A rise in car insurance premiums and ongoing cost-of-living issues may lead drivers to sell their vehicles and opt for alternate transport. For dealers, there’s a very real possibility that demand for cars could fall as a result of rising insurance premiums.
There’s another angle to this too; a rise in car insurance costs increases the total cost of car ownership. For a customer on a budget, this can lead to them looking for cheaper cars that help them save for insurance costs down the line. For dealers, being aware of cheaper stock options that are popular could be a great way to combat shifting demand.
It’s not all doom and gloom, though. There is an opportunity to excel in this space and take advantage of a sticky situation.
How Dealers Can Excel In A Tricky Situation
Value added products present a great solution to customer car cost worries. As part of a value-added package, customers could receive insurance and breakdown coverage, as well as MOT and service cover. These packages are becoming popular due to their ease and financial savings when everything is sold as one. For car dealers looking to address demand issues, value-added products could be the golden ticket to more deals.
Final Word
Car insurance is on the rise, presenting a potential fall in demand that hits dealers bottom lines. For those looking to ride the wave and even excel, value-added products could be your play. Being able to provide a complete car ownership package to a customer is an exceptionally attractive proposal and a potential way to steer through uncertain times.
Are you looking to add a finance lender to your panel? LM Operations has grown significantly in recent years while still retaining a family approach to its customers. Book a chat to see how we can help you maximise business in an uncertain car industry.