10 Jan 18

The residual value gap between petrol and diesel cars is narrowing

Petrol fuelled cars are closing the residual value gap with their diesel equivalents across the five largest European car markets, according to a new study.


In the UK, petrol cars already retain a higher percentage of their new price after three years and 90,000km than diesel models, and France, Germany, Italy and Spain are all following a similar trajectory, says the Diesel Intelligence report by Autovista Group.


Regulatory changes by national and local authorities, allied to negative press reports in the wake of the Volkswagen Dieselgate scandal, are leading to the value retention of petrol cars growing at a faster pace, suggests Autovista.


Diesel’s share of the new car market had been slowly declining across all the Big 5 European markets prior to Dieselgate, but the pace of change has accelerated. This is particularly the case in France, Germany and the UK, where anti-diesel political sentiment has intensified.


Glass’s, the UK division of Autovista, calculated that in December 2017 petrol-powered cars typically retained 45% of their original list after 3 years and 90,000 kilometres, compared to just 38% for diesel models, representing a gap of seven percentage points. Official sales figures reveal that diesel’s share of the British fleet market has fallen below 60% every month since November 2016, reached parity in August 2017.


“Petrol has, of course, been the main beneficiary and based on this trend is set to surpass diesel as the leading fuel among fleets within months,” said Diesel Intelligence.


In the other four markets diesel still holds the advantage, but it’s lead is falling. In France, for example, at the start of 2015 used diesels were achieving 41% of their list price compared to 33% for petrol-driven cars after 36 months and 90,000km. Last month, however, the equivalent figures were 43% for diesel and 37% for petrol. The gap between the two fuels has narrowed from an average of eight percentage points to six in just two years, and with the French Government planning to increase the tax on diesel by 10% (adding about €0.076 per litre) to bring the cost of the fuel into line with petrol, the competitiveness of diesel cars will be further undermined.


In Germany, where the pump price saving of diesel compared to petrol is greatest at €0.18 per litre, Autovista reports that diesel’s lead over petrol has slimmed from seven percentage points at the start of 2015 to just four at the end of last year, with diesels now achieving 43% of their original list price compared to 39% for petrol cars.


The residual values of diesels in Italy and Spain have proved to be more resilient, but even here the gap in Italy declined from less than six percentage points in 2015 to below five every month since July 2017.

Authored by: Jonathan Manning