The average value of used diesels sold in the UK in the third quarter of this year is 5.7% lower than in the first quarter. For some popular diesel models, valuations are down by as much as 26%. Time to panic?
No – panic is never a good guide. But for everyone affected by the residual values of diesel cars, from dealers to fleets and manufacturers, this precipitous drop in Residual Values is cause for worry, and attention. And not just in the UK, even though the RV drop has some very country-specific causes.
Because the fact is that diesel is under fiscal and regulatory pressure across Europe, and the big question is how long the motorisation's inherent advantages (especially for higher-mileage use) will continue to outweigh the disadvantages (especially for fleets, which typically have a higher-than-average diesel share).
The UK figures were collected by Motorway.co.uk, a British used-car valuations platform. The company analysed more than 24,000 used-car valuations made since the start of 2017, focusing on the 10 most popular models in the UK. Valuations for diesel cars were compared to those for equivalent petrol cars. The overall result: whereas average used diesel values have dropped by almost 6% from Q1 to Q3, average used-petrol values have increased by 5%. The divergence is the result of a drastically reduced demand for so-called 'dirty diesels'.
Out of favour
Hardly anyone needs reminding that the declining fortunes of diesel can be traced back to the VW emissions scandal also known as 'Dieselgate', which erupted in September 2015. The affair fatally amplified the already growing negative vibe surrounding diesel's impact on air quality.
Diesel, once subsidised throughout Europe for its lower emissions of CO2 than petrol, has since fallen out of favour with both national and local governments (abolishing favourable taxation, installing punitive bans), manufacturers (signalling a switch to electric) and consumers (for both economic and ecological reasons).
Trickle to flood
The question since then has been: When will this start to affect diesel market share, and diesel RVs? Fast-falling residual values will have an amplifying effect, reducing the business case for buying new diesels. The news from the UK now seems to indicate that the trickle of diesel devaluation is turning into a flood.
It could be argued that the situation in the UK is determined by country-specific announcements of 'toxin taxes' and diesel scrappage schemes, but other countries have their own factors pulling the market away from diesel. What the almost 6% drop in used-diesel values over just half a year indicates, is that the pace of diesel devaluation is accelerating.
Corsa and Astra
Motorway.co.uk took a sample of 24,338 vehicles valued through its website for the 10 most popular used-car makes in the UK. All ages and variants of each model were included in the analysis. Some examples:
→ The Audi A3 diesel model lost 11.3% of its residual value from Q1 to Q3. The petrol version gained 5.2% over the same period.
→ The BMW 3-Series diesel lost 6.18% over two quarters, while the used petrol version gained 11.91%.
→ The average used diesel version of the Ford Fiesta lost 4.77%, while the petrol version gained 7.33% in value.
→ The average RV for the Ford Focus diesel lost 2.98%, the petrol version gained 17.79%.
→ Sharpest used-diesel declines were noted for the popular Opel/Vauxhall models Corsa (-26.31%) and Astra (pictured; -17.75%).
→ Only the used-diesel versions of the Nissan Qashqai (+0.52%) and the VW Polo (+1.52%) saw their RVs rise, but far less than their petrol counterparts (+12.4% and +19.3%, respectively).
“Used-diesel car prices are only going one way – and that’s down”, commented Alex Buttle, director of Motorway.co.uk, on his company's survey. “This year has already been a total shocker for diesel owners. And now that most major manufacturers have launched diesel scrappage schemes, it doesn’t look like it’s about to get any better. Diesel cars are really starting to look like white elephants”.
Mr. Buttle pointed out that more and more motorists are choosing used petrol over used diesel, which translates into rising values for the former. Electric and hybrid cars are also benefiting from the trend, albeit less than petrol – at least for now. One silver lining: “For prospective buyers purely after cheap deals, it is definitely 'bargain bucket bonanza' time in the used-diesel market”, says Mr. Buttle.
Image: Michel Curi, CC BY 2.0