Is diesel losing its edge?
March 26th, 2009 by Richard Aucock
DIESEL cars are still worth more than petrols on the used market, reports auctioneers BCA… for now, that is.
However, the gap is beginning to diminish – and may in time disappear.
This is because so many fleets are choosing diesel models instead of petrol ones, due to the savings and tax benefits they offer. Thus tipping the used market supply and demand ratio.
On the surface, there doesn’t seem to be a diesel problem, says BCA director Tony Gannon. Looking at 2008, ‘values actually increased during the first quarter, and only started to fall when the fuel price was at its peak, in the early spring months.’
Like the rest of the market, they then declined. However, they ‘recovered sharply in January of this year, and have continued upwards in February.’
It’s a £500 difference between diesel and petrol, he says. That’s a healthy 11 percent. All good news, then? No.
This time last year, the gap was 18 percent.
The stumble of diesel comes as petrol powered cars stage a recovery. Indeed, they started climbing again a month earlier than diesel – and have been going up since December 2008.
So, what’s causing it? Pump prices is one factor, says Gannon. ‘The price paid by motorists at the pumps is significant, and will affect desirability. ‘
Gannon says customers are willing to pay extra for diesel because of the economy benefits they offer.
There’s more to it than just that, though. ‘In the remarketing arena, supply and demand is the critical price-driver and, as fleets have registered increasing numbers of diesel cars in recent years, it is tempting to suggest that used fleet diesels will continue to get relatively cheaper.’
This is where the market is likely to get complicated. ‘If (private) motorists follow the lead set by fleet operators – as they inevitably do – we could see increasing demand for used diesels matching the rising supply of stock available to the market.’
Result? A situation that’s hard to predict. The general message is, though – when it comes to diesels, make no assumptions…
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