Fleet News

Early sales cancel out diesel benefits

FLEETS may need to completely rethink replacement cycles and hold on to diesel models for much longer to ensure they get value for money out of their vehicles.

Exclusive research has revealed that in some cases fleets are ditching their diesel models six months before they replace petrol-engined cars.

Analysis of vehicles at auction shows that fleets seem to be selling diesel vehicles at the same mileage or age threshold as petrol models.

Because diesel models are perfect for high-mileage work, most are reaching their mileage threshold much more quickly than petrol-engined cars and as a result are being sold ‘early’.

But taking a standard approach to vehicle replacement is a fundamental error that ignores the benefits of running diesels for longer periods of time, mainly through fuel cost savings. Diesels also continue to have strong residual values past the 60,000 mile replacement benchmark.

A market analysis report by Manheim Auctions said: ‘Given the additional up-front costs, are fleets getting value from the increased longevity of the diesel powertrain?’

Its research showed that, on average, petrol-engined vehicles were being sold at 40 months, with 45,443 miles, for £5,021. But diesel models were being sold at 38 months, with an average of 61,424 miles for £6,459.

The discrepancy is much wider in some sectors, particularly executive and compact executive. In the executive sector, average replacement for petrol models is 49 months, 70,796 miles, while diesel is just 36 months at 70,143 miles. Yet the average petrol executive vehicle value is £8,062 and diesel £12,141.

Manheim’s director of planning and communications, Rob Barr, admitted that although its research has revealed a potential problem for fleets, it could not explain why.

He said: ‘It’s not our job to report on the reasons why this is happening, but rather to provide the facts and raise the debate. Why, for example, would you take an executive sector diesel model ‘off fleet’ eight months earlier than a petrol counterpart when the mileage is only averaging 2,000 miles more?

‘The average executive diesel selling price is close to £13,000, so the values involved are still significant.’

In its analysis, Manheim says: ‘The average selling prices and retained percentage against cost new show a positive performance in favour of diesel models, particularly in the executive, compact executive and 4x4 segments.’

  • View more data on Manheim's findings.

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