The resilience of diesel

Robert Donaldson

12 Oct 2018, Blog Post

The resilience of diesel

The emergence of the diesel emissions scandal in the autumn of 2015, seemingly wrote the epitaph for diesel engine cars.  To some extent, the UK government continue to put pressure on new diesel car sales with the introduction of new legislation.

The effect has been stark. At the sales peak, more diesel cars sold than petrol and alternative fuel vehicles (AFVs) combined. With significant bad press, increased Vehicle Excise Duty and benefit-in-kind taxation changes, the erosion of diesel car sales has been rapid. Shown in the chart below with data from the SMMT, so far this year, just under one in three new cars sold use diesel power.

An unintended consequence however, is that average new car CO2 levels increased in 2017 for the first time in two decades. This is as a direct result of fewer new diesel car registrations leading to the government accepting that diesel still has a part to play in reducing CO2 levels.

Diesel in the used car market

The chart below shows Glass’s Trade values expressed as a percentage of original cost new price for cars up to 5-year-old.  It shows little change for diesel cars over the past three years. However, with increased retail demand, there are increases for both petrol and AFVs, due to short supply in the wholesale market.

The fast pace of price rises for petrol and AFVs is having an impact on conversion rates in the wholesale market. Despite the negativity towards diesel, through the summer months they have outperformed petrol cars and AFVs. The chart below shows the first time conversion rate of cars between 2.5 and 4.5 years of age.

It appears that used retail customers currently view diesel as a more attractive value proposition appearing cheaper to buy and run than their petrol equivalents. These are still key drivers for retail consumers, often outweighing all other considerations.

Looking ahead, Glass’s predict a shortening supply of used diesel cars and conversely an increase in petrol and AVFs, so we should expect a firming of diesel prices unless retail demand weakens with increasingly negative legislation.

About the author

Robert Donaldson

Robert DonaldsonUK Car Editor

Born in Acton, London, Robert worked for a number of blue chip organisations including Compaq, British Airways and 3M. Of interest, Robert also owned a repair garage with his brother in the 90s with whom he restored older cars, before joining Glass’s in 2006.