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Residual values of prestige diesel cars increase, despite huge supply

New diesel cars sales have grown by 145% to 897,887 units in the last 10 years to 2005*, which has led to a forecast of significant fall in residual values as supplies run into the used car markets.

However, analysis by EurotaxGlass’s of a range of prestige-brand saloon cars suggests the opposite is true. Here the premiums being paid for used diesel-powered vehicles over their petrol equivalents have increased over the past three years.

The EurotaxGlass’s analysis first compared the different residual values of used prestige-badge upper-medium petrol and diesel models of a similar specification, engine capacity and list price.

It found that the price gap between a 12-month-old BMW 320d SE (diesel) and an equivalent 318 SE (petrol) has risen by 45%**, to £2,175, since May 2003. The premium for a 12-month-old Audi A4 1.9 TDI SE (diesel) over an Audi A4 2.0 SE (petrol) has increased by 19%**, to £2,150 over the same period.

In both cases, the additional cost of choosing a new diesel model more than pays for itself when the car comes to be sold after a year - the diesel Audi A4 has a list price £1,490 more the equivalent petrol model, while the diesel BMW 3 Series costs an extra £1,810 compared to its petrol equivalent.

Increases in premiums for diesel models were also found in the large executive car segment.

The EurotaxGlass’s analysis shows the premium for a 12-month-old BMW 525d SE (diesel) over an equivalent 525 SE (petrol) has risen by 36%**, to £2,100, since May 2003.

Meanwhile the price gap between a 12-month-old Mercedes E220CDi Classic SE (diesel) and a comparable Mercedes E200 Kompressor Classic (petrol) has increased by 46%**, to £2,300 during the same period.

“The increased supply of diesel cars into the prestige used market isn’t having the adverse effect on values that many predicted,” said Richard Crosthwaite, prestige car editor at Glass’s.

“While a large proportion of new diesel car sales over recent years can be attributed to the corporate market, it is higher levels of demand from consumers that has kept used prices firm.

Many more buyers recognise that diesel technology has moved on significantly over recent years, offering improved refinement, performance and economy, as well as strong residual values.”

Crosthwaite did say the premiums would retreat over the coming years, but as diesel has become the first choice for buyers he couldn’t see any dramatic falls in residual values.

(* Source: The Society of Motor Manufacturers and Traders (SMMT)
** These figures are adjusted to take account of the different list price increases for petrol and diesel models since May 2003.)

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