Monday 23 July 2018

How demand for used diesel cars will continue for a long time yet

But we need a managed transition to the so-called new electric era

Diesel will still be in demand
Diesel will still be in demand
Eddie Cunningham

Eddie Cunningham

One important point overshadowed in the fallout and comment over Toyota's decision to stop selling new diesel passenger cars from next year is the claim that there will be strong demand for such cars on the second hand market.

To his credit, Toyota Ireland chief Steve Tormey emphasised that in an interview with Motors.

He said: "There will still be demand for second-hand diesels. Supply and demand will dictate that for a period the residual value will stay quite strong."

He expected people will still want a good, used Toyota diesel in three years' time.

Of course, we have to allow for the fact that he is trying to keep the market calm and preserve second-hand values at a time of potential volatility. That's only correct, proper and businesslike.

But there is the reality too that, as he mentions, people will still want and need diesels for some time.

The message is that diesel on the used market won't die for quite a while.

Yet there is no doubting the level of uncertainty among owners and potential diesel buyers. People are fearful of getting lower trade-in values. The fact is that used values for many cars, not just diesels, have dropped (though not by as much as some might make out). That dip can be attributed to the volume of imports as much as anything else.

So, while the market is adjusting to import values, it is also returning to what it was 10 years ago when petrol was so popular.

Diesel is now being bought more rationally by those who drive the distances that warrant its use and not by those covering minuscule annual totals of 5/6,000kms.

Add the increasing presence and popularity of hybrids to the mix and it is easy to see why diesel is no longer the darling. But it is not dead, especially when the people who say it is long-term are at pains to point out that there will be demand for second-hand models in the medium term.

Despite all that, there is no denying the sword of Damocles hangs over diesel, with the government planning bans prior to the 2030 electric era.

We need the changeover to electric to be orderly and managed as and when the EVs come on stream in volume. That could be a slow enough process.

Meantime, you should not be overly penalised because you own a diesel in the absence of anything else that can do the same job for you.

The government in 2008 canonised diesel - it now needs to find a way to ensure we don't suffer its demonisation by having to suffer poor trade-in prices.

Maybe it is time to start talking and thinking about a special government scrappage scheme drive for older diesel models?

Indo Motoring

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