Fleet News

Manheim dispels new fears over diesel residuals

FEARS of diesel powered ex-company cars swamping the used car market in three years time, damaging residual values could be wide of the mark, according to Manheim Auctions.

It believes used car traders are already gearing up for the anticipated huge influx of defleeted diesels in 2004 and 2005.

Martin Potter, Manheim Auctions' corporate sales director, said: 'We are already seeing a number of traders who are either growing the diesel sections of their used car business or setting up dedicated sites just for diesel cars.'

Sales of diesel cars into the fleet sector in 2001 were 33% ahead of diesel volumes in 2000, and for the year to date, fleet diesel sales are 55% ahead of 2001, as company car drivers move in droves to low-emission diesel-powered cars in order to lower their benefit-in-kind tax bills under the new carbon dioxide based company car tax system.

This dash for diesel - that shows no sign of abating - has led CAP Motor Research to downgrade its residual value forecasts for diesel cars, warning that there could be an extra 150,000 ex-fleet diesel cars per year hitting the used car market.

However, improvements in diesel technology and high pump prices for petrol and diesel will fuel greater retail demand for diesel cars, according to Manheim.

'Used car traders are using the growth in new diesel car sales to educate private buyers now about new diesel engine technology and the improved fuel consumption rather than when the volume of cars start returning to the secondhand market. That way your typical used car buyer will be ready to accommodate those extra diesel cars from 2004,' said Potter.

He accepts, however, that diesel cars will lose their used car price premium over petrol powered equivalents during the next 12-24 months, effectively increasing depreciation for diesels because they tend to cost more than petrol variants.

'But those cars with the right specification, mileage and condition will still attract strong prices,' said Potter.

'The market is not likely to get to a stage where petrols consistently earn more than diesels, simply because there are huge volumes of petrol cars already in the market.'

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