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Diesel pump price increase will not damage 'oil burners' residuals

The Government's fuel escalator now means that diesel is more expensive per litre than petrol and with the typical knee jerk reaction of our industry there are now widespread predictions that diesel car residuals will suffer as a consequence. This, however, is not the case.

The old habit of lumping all diesels together needs to be discarded, particularly with new technologies, and the onset of cleaner city fuel. And the assumption that diesel and petrol are two discrete entities is a dangerous polarisation of the true picture.

To justify paying more for a diesel the customer must have a reason. There may be the odd perverse driver out there who actually wants to pay more for their fuel or likes the smell of diesel. But for 99.9% of diesel car buyers the prime reason for their choice is economy.

Over the past decade the image of diesel has changed tremendously. In 1990, diesels tended to be slow, under-specified, taxi-like and noisy. However, as the 90s progressed many diesel engines were adapted for performance. Unfortunately this came at some cost to the economic benefits.

But over the past couple of years the pendulum has swung back and, in many cases, economy is once again the order of the day. So much so that it is now possible to buy a 100bhp diesel saloon which will quite easily do close to 50mpg.

It is these saloons which will be the blue chip stock of the future. We can forget about the 'old' diesel engines that in reality offer little economic benefit now over their petrol counterparts. And I would agree that these cars could be worth less than a petrol equivalent.

However, the new generation cars will always be popular with the same used buyer who has always been attracted to diesel. So what if it costs you £5 more to fill up if you are doing it half as often.

We know the cost of all motoring is going to escalate further during the coming years - probably exceeding the average used car buyer's ability to pay. That, in fact, is the whole thrust of the policy. That is one of the reasons for the downsizing trend we are seeing already.

But if a driver does not want to downsize, modern diesel-engined cars are the real alternative.

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