Fleet News

Disposals experts dispel fears of diesel RV crash

THE issue of diesel residual values continues to dominate the headlines in the fleet market almost as much as the housing market does in the Daily Mail and Daily Express.

Industry groups are clashing over whether or not values are set to plummet as sales of diesel cars rise ever higher, thus threatening to flood the secondhand market in the future with unwanted cars.

But the latest research by disposal expert CAP dispels the view, showing that almost half (48%) of dealers have reported a 'rising private interest' in used diesel cars.

Only a small minority (5%) said that demand for diesel models was decreasing.

Research into private retail demand for diesel cars by CAP in March this year shows that certain models are also more popular than others.

Buyers appear to be more interested in larger models, with the BMW X5, Citroen C5, Ford Galaxy, Seat Alhambra and Volkswagen Passat all popular diesel choices. Almost 100% of buyers opting for a BMW X5 would prefer a diesel compared with just 10% choosing a 3-series diesel, it adds.

Across the Ford range, 70% of buyers would opt for a diesel Galaxy with less than 5% opting for a diesel Fiesta.

Private retail demand for diesel cars continues to differ widely by model (see table below).

Martin Potter, corporate sales director at Manheim Auctions, talks to vendors from Bristol and Essex to Glasgow.

He said the majority of demand for 4x4s was for diesel, mainly due to the fact that fuel consumption on petrol variants was so high. Tom Madden, director of customer affairs at BCA, agreed: 'In the executive sector, we are seeing that the bigger petrol engines are out of favour with used buyers and diesel power is in. Sensible running costs are just as important here as elsewhere.

'This sector often attracts the self-employed, small business owner who wants a prestige car without paying prestige money to acquire it and running costs will be just another factor they will consider.'

Other marques are also popular as diesel variants according to Potter. He said: 'There are lots of diesel Mercedes-Benz cars going through at the moment and the diesel Golf GTI is also popular. Lots of younger sales reps are choosing these as they still get the performance but better fuel economy. About 60% to 70% of Golfs coming on to the market are diesel.'

Demand is also variable depending on region. Areas which show a strong demand for diesels include Northern Ireland and the north east with Scotland recording the lowest demand, according to the CAP research.

Potter said that the actual demand for diesel at Manheim Auctions had been matching supply and there have not been any sales where diesels have remained unsold.

However, he contradicts the CAP research and claims that Scotland is enjoying stronger demand for diesel than many southern areas.

He said: 'The northern areas have been more switched on to diesel for longer but the south is swiftly catching up and people are looking to buy three or four- year-old diesels. There has always been strong demand in Scotland, where people have been running diesels for years and will continue to do so. Glasgow has always been good, especially for people trading used cars in rural areas.'

Potter said poor weather in winter could spur people to opt for diesels to combat starting problems and to improve fuel economy. Madden added: 'It is not just the cheaper wholelife costs that attract motorists. Many people like the driving characteristics of a diesel, the high torque at low speeds makes town driving effortless, while on the motorway acceleration through the gears is always impressive.'

Last week's Fleet News warned readers of predictions that values of diesel fleet cars could dip below petrol variants within the next three years.

Research from GE Capital claims that mainstream diesel cars currently on run-out will not do as well as their petrol counterparts at disposal time.

Giving his reaction to the claims, Madden said: 'It is difficult to see where these doom and gloom merchants are finding evidence to support their theories that oversupply in the fleet market will depress prices.'

Industry groups have recently tried to calm fears that fleets will suffer a nosedive in values. Madden said that just because new diesel volumes had risen and are likely to continue at high levels, it does not mean the market will see a fall in residual values for used diesels.

He said: 'We believe that an ex-fleet diesel, well-maintained, in a good specification and colour, will always be a desirable product at remarketing time. Over the years it has become a hobby to predict the demise of diesel. No one has got it right yet and it certainly will not be happening in the next two years.'

Percentage of secondhand buyers expressing a preference for diesel

##dieselchoice--none##

  • Subscribe to Fleet News.
  • Get the news delivered to your desktop
  • 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