Diesel Cars On Decline

Diesel cars in decline: How might this affect the used car dealer?

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Motorists appear to be turning their backs on diesel as they look to more eco-friendly vehicles, industry figures suggest. We look at how this might affect the used car dealer.

When it comes to buying a new car, there’s always a question you ask yourself: “petrol or diesel?” Both engine types have their pros and cons we usually we decide based on the cost of fuel, or the type of driving we adopt such as urban or motorway driving.

The kind of questions we ask ourselves are: ‘What is the cost of unleaded at the moment? Will I mostly drive motorway miles? Will I just pootle around the city centre?’

When it comes to choosing the fuel type for a new car we usually stick to petrol or diesel because it’s what we know. However, as figures suggest, there is now a third element to this dilemma. One that has taken its seat at the table, and is asking for equal helpings of the motoring market.

What about eco-friendly?

No longer just a buzz word. No longer just a fad that over-promised on a vintage episode of Tomorrows World. No longer shrugged off with a ‘yeah right’ around the pub table. Eco-friendly… green… hybrid… electric… However you refer to it, the eco-friendly ‘green’ option has clawed its way into our age-old motoring conundrum, and is satisfying a bigger portion of drivers demands each month.

Choosing the right engine that is going to drive your new car is an important decision. Not only because of the build-costs involved and the price of gas and fuel efficiency, but also the impact the engine will have on the environment. The Society of Motor Manufacturers and Traders (SMMT) said that 78,778 diesel cars were sold in January, a drop of 4.3% on the same month in 2016.

Now here’s the eyebrow raising part. Over the same period of sales, electric cars and other alternatively-fuelled vehicles (AFVs) leaped by 19.9%.

For the first time ever – AFVs now account for more than 4% of the market. Okay okay, I know you’re going to say: ‘But it’s only 4%.’ However, just consider that January’s total vehicle sales were 174,564 – and of that 7,270 were eco-friendly cars.

Every single month a greater proportion of green cars are purchased, whilst traditionally fuelled vehicles like diesels decline. Some 3,536 less diesel cars were bought compared to the same month last year.

Let me put it another way. More people bought AVFs in January than the total number of people who bought a Ford Focus.

So what’s going on at the petrol pumps? Well. Sales of diesel cars have actually been dropping for several months. In fact, 7 of the last 8 months have seen a drop!

Steady media attention. Public outcry and political focus on pollution. Health issues.  The negative revelations that Volkswagen and possibly other manufacturers were fiddling emissions data, are souring our taste for diesel cars.

In December 2016, sales of diesel cars were down by 6.8% on the same month a year earlier.

Diesel cars: So are they that bad?

To sprinkle some positivity over this article, diesel cars as we know are more fuel efficient than petrol. You get more bang for your buck at the pumps, and they also produce less CO2 meaning, at present, you pay less road tax because UK road tax is based on how much CO2 a car emits.

However.

CO2 emissions don’t paint the entire pollution picture.

Diesel Cars in Decline

Diesel engines produce more nasty pollutants like nitrous oxides, hydrocarbons, and other heavy particulates that constitute that thick toxic smog you see hanging over big cities. These are not only harmful to the environment, but have been linked to respiratory conditions such as asthma.

So are the headlines over diesel cars finally hitting sales? Recent figures for January seem to confirm the trend. One year ago, new diesel car sales were out outnumbering those of petrol cars. Now? The situation has reversed.

Big City Influence

Several major capitals around the world have voiced their desire to ban diesel cars within 10 – 25 years because of the pollution they cause. The Mayors of Paris, Mexico City, Madrid and Athens say they are implementing the ban to help improve air quality, and are also going to give incentives for alternative vehicle use and promote walking and cycling.

Pollution in London 2017 - photo by Leon Neal
Pollution in London 2017 – photo by Leon Neal

This is a huge statement of intent and a welcoming hand to eco-friendly vehicles. In recent weeks we have seen a feed of troubling media and new research spill into the news.

The poor quality of London air is fuelling demand for more direct action and harsher tolls against ‘dirty cars’, and diesels are the ones to be dragged through the streets.

For instance, as of April 2017, Westminster will hit some diesel drivers with extra parking charges. It is also believed a diesel scrappage scheme could be implemented soon to encourage motorists to ditch cars which are the heaviest polluters.

London T-Charge?

From the 23rd October 2017, a brand new ‘toxicity charge’ will take effect in central London. The so-called T-Charge will see the owners of older, more polluting cars face an extra £10 fee for entering the congestion charge zone. City Hall estimate that up to 10,000 vehicles every weekday will be liable for the new emissions levy.

How could this affect the used car dealer?

You’d think that with a decline in demand for new diesel cars would reflect on the used car market – but apparently no. According to CarBuyer.co.ukdiesel cars are more in demand than cars with petrol engines and can be worth 10% more when bought secondhand.

It appears that diesel cars, at least for the time being, can retain a good value and good demand on the used forecourt. Whether the ever increasing financial obstacles the government hurls into the path of diesels reduces their appeal to buyers, and their value, this is a question many used car dealers should consider. Especially those within the big city limits.

Used Diesels vs. Used Alternatively Fuelled Vehicles

If the new consumer market is anything to go by, it looks like we’ll see a slight but steady decline of diesels flowing into the used car market over the coming years. Slowly being replaced by a new demand for used hybrid, electric, and other AVF vehicles. This brings about a whole new set of goalposts to kick through, as common diesel issues that we’re all familiar with like DPF or glow plug faults, are replaced by potential hybrid battery pack problems  or complexities associated with the drive train.

Used hybrids however are nothing new. The first Toyota Prius rolled onto UK roads in 2000 and with the 4th generation in the showrooms now it’s fair to say hybrid technology is reliable and in-demand.

The problem from a used buyers point of view is the unknown. They assume expensive repairs because of the newer and complex technology – even though vehicles like the Prius has no clutch, conventional starter motor, alternator or drivebelt. Plus the hybrid system apparently leads to longer durability of brake discs, pads and tyres. But, of course, it’s the battery pack that has most potential buyers worried.

Hybrid Green Cars

I guess it’s the same kind of worry traditional used car buyers have about a timing belt. You’ll probably think something like:  ‘If the battery fail then the repairs will be expensive. The parts will be expensive. That will not be a good day.’

According to Honda, reliability isn’t an problem with their hybrids. They say the batteries in the Civic IMA (from 2002) are lasting 10-14 years, while the company has yet to replace a single pack from newer models such as the post-2010 Insight and the Jazz Hybrid offered from 2011.

With these batteries still under warranty, most manufacturers have yet to set prices for replacement parts. Mitsubishi UK advise battery pack costs have halved in the past three years and by the time the current crop of cars are out of warranty – and by the time their battery packs begin to fail – replacement costs will be even lower.

What is more encouraging is that it’s unlikely a complete battery pack will need renewal. It will simply be a question of replacing the dead cells inside, reducing costs even further.

So how much does an entire battery pack cost for a Mk1 or Mk2 Prius?

At the moment, it’s around £1,000 to £1,200 respectively for replacement battery. A new battery for a Mk3 is priced at £5,730.

Replacing the battery pack on an original Honda Insight or Civic IMA will cost around £2,000, but only £900 on the later Insight and Civic IMA.

In 2012, Honda switched from nickel metal hydride batteries to lithium-ion versions, almost tripling replacement costs from £972 to £2,700.

So in this article we’ve talked about the perception and decline of diesel cars, and the possible effect this could have on the used car market. Even though we predict that eco-friendly cars will begin to take up more and more space on the forecourts, there is still a feeling of the unknown when it comes to used AVFs aftersale problems and potential repair costs.

One thing’s for sure. Times are changing, and with it, the landscape of the new and used car dealer forecourt.

Thank you for reading this post on the Warranty Administration Services Ltd blog, about diesel vehicles on the decline.