New diesel sales have slumped hugely in recent years, but second-hand buyers continue to see the appeal.
Although far from the heady days of market domination, diesel isn’t exactly a dinosaur fuel, at least in the used market, where its strengths are still appreciated.
In 2020, diesel cars took just a 19.7% share of the new car market, down from 26.7% in 2019, as petrol’s share continued to dominate and plug-in cars begin to gain serious traction. At the end of 2010, diesel had a hefty 46.1% market share.
“Diesel-fueled cars are still in demand in the used car market, particularly for larger cars,” Cap HPI head of valuations Derren Martin tells Company Car Today. “In the city car and supermini sectors, this is not the case, although as many manufacturers no longer make diesel small cars, low supply can mean strong used prices.”
The popularity of diesel remains among larger cars, where its efficiency benefit is more marked.
“Smaller diesel cars are less plentiful and in less demand than larger cars,” says Martin. “Once you get above a C-sector or medium-sized SUV, petrol vehicles can become heavy on fuel and therefore not the first choice for many drivers.
“Larger, premium cars are still popular as diesels, whereas performance premium cars are more popular with a petrol engine,” he continues. “Mainstream brands have moved away from new diesels.”
LOW SUPPLY EQUALS STRONG MARKET
The used car market is in something of a perfect storm for strong prices at present. Supply problems for new cars mean more fleets are holding on to older vehicles, and the issues around Covid and its effect on vehicle sales last year have led to strength across the board.
“Any stock is in demand, no matter what the fuel type,” says Cox Automotive insight and strategy director Philip Nothard.
“With the market being starved of new vehicles, values have continued to rise since showrooms reopened.
“Fleets continue to utilise the fleets they have, rather than applying their typical vehicle replacement strategy,” he continues. “The increase in lead times in new vehicle production and continual lack of supply has slowed their decisions to move older fleet vehicles on to remarketers.”
ELECTRIC SUPPLY REMAINS UNSTABLE
According to Cox Automotive, electric vehicles continued to be “unstable as a used vehicle proposition, and will continue to do so whilst the focus remains on new and not used”.
Darren Martin of Cap HPI agrees, saying: “There are few incentives for the used car buyer to go green. In general, these AFVs carry a premium over ICE equivalents that the consumer has been unwilling to pay.”
The exception to diesel’s strength is, according to Cap HPI, around cities with clean air zones, at which point demand drops away significantly, and EVs increase considerably in popularity.
Since the beginning of 2021, BCA has seen a rise in the values of all fuel types, with diesel still outpointing pure EVs so far.
l Petrol +17.1%
l Hybrid and PHEV +16.2%
l Diesel +6.7%
l Electric vehicles +1.8%
BCA’s COO UK Remarketing Stuart Pearson shares his thoughts on how the used market is viewing diesel
1. Balance between all fuel types.
While it is tempting to suggest that it is all-change in the used car market, with diesels out of favour and a huge rush towards alternatively fuelled vehicles, the reality is that the market has been steady for all fuel types over recent months. The effect of the pandemic aside, it is apparent that demand has been well balanced for diesel, petrol, hybrid and electric vehicles during 2021.
2. Diesel’s strengths appeal to used sector.
Demand for diesel in the used sector remains strong and, for many used car buyers, diesel is the preferred choice of fuel type because it offers great economy and typically lower running costs.
3. Latest diesel tech will continue to appeal.
There will continue to be demand for diesel in segments where it makes sense, such as in SUVs and 4x4s. As clean-air zones are announced in cities around the UK, we expect to see demand rise for those exempt vehicles with the latest clean diesel technology.
Overall, average diesel prices at BCA continue to rise steadily, underlining that trade buyers continue to see a profit opportunity in diesel product.
5.Data is key to best values
There is a complex and evolving picture in the wholesale sector, and sellers should look to real-time data to inform remarketing decisions. The best prices will be achieved by targeting the right buyer base with the most detailed information.