Diesel is likely to remain a crucial part of the automotive fuel mix for the foreseeable future and the finance industry should “remain calm” over future values, according to the UK’s Vehicle Remarketing Association.
The trade organisation – which represents companies that are involved in remarketing more than 1.5 million vehicles every year – says that there is every reason to expect that the values of most diesels will stay relatively stable.
Chairman Glenn Sturley spoke out amid concerns that asset values will fall because of growing anti-diesel sentiment.
There are worries about the effect of diesel emissions on health in urban areas and, in some cases, cities are considering specific bans on diesel models over a certain age.
A small number of companies and local authorities have banned the purchase of diesels for their own fleets altogether.
Sturley said: “There is a lot of noise going on around diesel which is causing some people to speculate on an unexpected decline in demand but, we believe, the picture is much more complex and less worrying.
“The main point to bear in mind is that there is no such thing as a single ‘diesel’ car – instead there is a whole range of Euro 4, Euro 5 and Euro 6 models, and the prospects for each of them are very different.”
He argued that, at one extreme, Euro 4 standard vehicles are much more likely to be affected by clean air legislation and their values could fall quickly. However, most of these cars are now at least eight years old, with lower residual value and finance risk.
He added: “At the other end, Euro 6 vehicles meet the latest emissions regulations and, however you measure them, are highly unlikely to be hit by any new rules and regulations.
These are newer vehicles and there is no concrete reason buyers won’t want them.”
So far, the VRA argues that the impact on diesel values has been limited, although it continues to monitor ongoing changes.
Sturley said: “So far, our members are reporting a slight fall in trade values for newer diesels against forecasts but this has not really fed through into the retail market. This shows how all the noise surrounding diesel is only having a limited material value.
“The fact is that car buying habits usually take years to gain momentum and also take years to fall away. There are many people who see themselves as diesel buyers, and they will not just change overnight.
“There may be some specific instances that have a localised effect, such as where different cities introduce clean air tariffs that affect diesels over the next couple of years, but these are only likely to hit the oldest models.”
Sturley added that newer diesel cars are following a largely predictable depreciation curve, although values for petrol-engined models are rising as demand grows in some areas.
He said: “The latest generation of petrol engines are very strong in terms of emissions and driveability and, as a result, they are enjoying better than expected residual values, largely because they are around in quite small numbers.”
In the medium-long term, Sturley said the VRA expects to see a gradual readjustment in diesel values as it becomes part of a wider spread of fuels available on the used car market.
He added: “Our view is that we are moving to a situation where there will be a portfolio of fuels where electric vehicles, different kinds of hybrids, petrols and diesels will all be around in quite large numbers. Buyers will become more conversant with the advantages of each.
“However, reaching that point will take some time and, while the media is doing its best to present diesel as untouchable in many cases, newer diesel cars remain a sound new and used buy in emissions, cost and value terms. Their values should remain stable.”
A trend of steady change was highlighted by the British Vehicle Rental and Leasing Association in its latest quarterly leasing survey, which showed that diesel still accounts for more than two-thirds (67%) of new registrations among its members, which operate around 987,000 cars.
The proportion has declined from 69.5% for the same period last year.