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CAP trade watch: The myth about diesel vehicles

The growth in popularity of diesel may have been driven by tax advantages for company car drivers, but its appeal has now become much broader.

This opened up new profit opportunities to used car dealers, who found they were able to charge significant premiums for diesel cars in comparison with petrol.

Retail customers considered the benefits of increased fuel economy sufficient justification for the additional front-end cost. Generally this is justified – provided the buyer is holding onto the car long enough to make the original price premium back in fuel cost savings. However, not all customers are mathematically precise in their calculations of future benefit versus current outlay.

This is revealed by the latest survey of independent used car retail dealers for the CAP Used Car Performance Index. This indicates that diesel has now seeped into the public consciousness as a guarantee of day-to-day cash saving, even against the evidence.

Dealers were asked what they considered to be a typical front-end premium in the retail price of a typical supermini – that is, a car the size of a Vauxhall Corsa or Nissan Micra. The results are surprising, given the superb fuel economy already offered by almost every car in that class.

According to the survey, dealers are able to charge £702 more for a diesel supermini compared with a petrol variant, identical in every other respect.

Given the small likelihood of the customer gaining anything like £700-worth of fuel economy benefit during a typical ownership period for such an already economical vehicle, this makes little practical sense.

Therefore, it seems the benefits of diesel are beginning to take on mythical proportions among some sections of the public. Given that the trade premium for diesel, in the supermini sector, ranges between £200 and £400, it seems the public love affair with diesel can generate much needed additional profit on retail deals.

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