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Cap trade watch: The future of diesels

Last summer we reported on independent used car dealer demand for diesel models. Our findings then were that demand outweighed supply – and this prompted further research.

Rarely has an issue provided such scope for eye-catching headlines and under-informed comment being passed off as expert opinion.

The growth in diesel registrations has certainly created future risk, but this new research confirms the supply and demand equation will change. But there is no evidence that the oft predicted ‘meltdown’ in diesel residual values will occur. Instead, the next few years will see a gradual reduction in diesel premiums.

Whatever the changes to taxation policy affecting the corporate new car market, used car buyers will continue to place significant emphasis on fuel economy. Diesel will continue to meet that need.

There are, however, areas of concern. For example, diesel continues to suffer from some negative perceptions among a significant proportion of used car retail buyers. However misinformed such beliefs are, they remain a factor influencing choice and are unlikely to change overnight.

This means the market for used diesels continues to present opportunities for growth, which could be influenced by carefully targeted marketing.

The current appetite for diesel in corporate fleets will be tempered by the re-imposition of a planned diesel surcharge of 3%.

But if this serves to temper demand then it is a tax change which will work in favour of the fleet industry by encouraging balance. This will feed into the used car retail sector by maintaining an element of control in numbers.

A healthy sign for the diesel market is used car dealer willingness to embrace the product. An almost universal view in this survey was that diesels still represent a valuable profit opportunity.

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