Fleet News

Experts issue diesel residuals warning

THE fleet sector faces a residual value crisis as thousands of company car drivers switch to diesel-powered cars to cut their tax bills under the 2002 carbon dioxide-based company car tax regime. Used car pricing experts forecast a fall in diesel residual values as fleet managers and their drivers focus on low CO2-emitting diesels as the key to cutting fuel and tax bills.

In April, fleet diesel sales rose by 16.4% compared to the same month last year, while year-to-date sales were up 12.9%.The danger lies in this booming demand for new diesel cars outstripping demand for used diesel cars, creating oversupply in the second-hand car market, and thereby damaging residual values. Diesels are currently fetching hundreds of pounds over their petrol counterparts, but residual value forecasting expert CAP Monitor predicts that this premium could fall by 9% in 2002-2003.

Mark Norman, senior editor of Monitor, said: 'High-mileage company car drivers are already switching from petrol to diesel cars ahead of 2002. Increased supply could outweigh demand, depressing vehicle prices. Many private buyers are low mileage users which reduces the advantage of diesel. The best option for fleets is to select diesels on the merit of the engine.'

Glass's Information Services predicts that diesel used car values could fall by 3% over the next two years. Adrian Rushmore, Glass's managing editor, cars, said: 'There is a huge chasm between petrol and diesel at the moment, caused by excitement over new technology and the fuel crisis. It ranges from £500 on a Ford Focus to £1,300 on a Peugeot 306 HDi. But in two to three years' time, the market will begin seeing these vehicles in volume and there will be a possible easing back of prices by 2-3%, although I think the market will support modern diesel technology.'

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee