Fleet News

Inconsistency over premiums charged for Euro 6 diesels

New car prices are painting a confusing picture over the predicted increase in purchase costs of Euro 6 diesel vehicles.

For many years, manufacturers have pointed to the cost of exhaust after-treatment – usually in the form of a reservoir of urea used to help clean up gases – as well as other technology that would create a bigger premium for diesel over petrol cars.

This is despite petrol models adopting more technology such as direct injection and, in many cases, turbocharging to achieve greater fuel efficiency and lower CO2 emissions.

Toyota has long argued that its petrol-electric hybrid models are ‘cleaner’ than diesel because of lower local air pollution gases such as NOx and particulates, although to cater for demand it still offers diesel engines in most models and will soon be sourcing some diesel engines from BMW.

However, BMW, which is rolling out Euro 6 diesel engines, does not have a consistent policy on pricing.

For example, the BMW 320d saloon has a price premium of £2,350 over the 320i saloon, both producing 184hp with the aid of a turbo.

But the same engines in the new 2 Series Coupé are priced rather differently, with the 220d commanding a £965 premium over the 220i.

BMW has so far been unable to offer Fleet News any more detailed explanation than the cost of engineering each vehicle to accommodate the engine, combined with an element of product ‘positioning’ which suggests attempting to manage demand by price.

Mazda has a more logical pricing strategy for diesel engines in its product range. For example, the 150hp 2.2-litre Skyactiv diesel is £1,700 more than the 165hp 2.0-litre Skyactiv petrol engine in the CX-5 crossover.

In the Mazda6 diesel, the difference between the 145hp 2.0-litre petrol (less powerful than in the CX-5) and the 150hp 2.2-litre diesel is £2,400. This is ‘positioning’ coming into play, as the gap can be partly explained by the petrol model being less powerful.

The Mazda6 saloon also includes Mazda’s i-Eloop energy recuperation system.

A Mazda spokesman said the premium for diesel was rooted in the technology on the car, “essentially technology to maximise the CO2 savings for fleet customers”.

But as our comparison shows, comparing like-for-like, the petrol model offers drivers lower company car tax liability as well as reduced running costs for fleets, while the petrol CX-5 also offers lower tax bills than for the diesel.

The diesel Mazda6’s advantage in fuel costs is offset by higher depreciation and SMR costs.

Martin Ward, manufacturer relationship manager at CAP Automotive, said: “This will be confusing for fleet managers and drivers, and to some extent it seems that manufacturers will price cars at a level they think customers will pay.

“Every vehicle product department will look at others on the market and follow each other when it comes to vehicle pricing.

“Fleet managers would need to ensure they choose the right vehicles for their fleet and in some cases perhaps investigate whether choosing a petrol alternative could be more cost effective or tax efficient.”


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Comments

  • Rob Chisholm, Applewood Vehicle Finance Ltd - 11/12/2013 12:35

    Manufacturers manipulating their pricing strategies? How strange. Whatever next?

  • Bob - 12/12/2013 09:12

    The price difference between petrol and diesel engines is all down to two factors, demand and cost to ensure the engines meet the Euro6 standards. Many manufacturers are now introducing Ad-blue which not only has a direct cost to the vehicle when new but a bigger impact on the maintenance costs. Using your example the BMW 302d. The engine is offered with their blue performance at £1000 above the standard car. You are paying £1000 extra for the vehicle to ensure its Euro6 but on top you have had to add the high cost of replacing the Ad-blue addictive at £8 per litre. On the BMW range with Ad-blue you can expect an additional £500 on the maintenance costs over 60.000 miles. For me the diesel market doesn’t have a future and people should be changing their policies today not when they are paying higher maintenance costs. Look what VAG/Ford are doing with their petrol engines, that’s the future. Also remember in three or four year’s time, these vehicles will go to the retail market where “Bob” who doesn’t know anything about cars will only have the option to buy diesel to drive 10.000 miles per year. Low mileage has never been good for diesel cars, now with the new tech available its more of a concern then before.

    • Rob Chisholm, Applewood Vehicle Finance Ltd - 12/12/2013 10:13

      @Bob - You are spot on 'Bob'. I have been saying for the past few years that many leasing companies have been unrealistically skewing their RV's in favour of diesel engined vehicles, when all of the latest evidence is that the typical private used car buyer will be no worse, and probably better, off in a petrol engined vehicle. Of course trying to convince many car drivers who get too wrapped up in the Car Park Status game that a 1.0 ecoboost engine is a worthwhile option is harder than it should be.

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