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CAP trade watch: Diesel powers still popular with customers

CAP regularly surveys dealers in the used market to understand the supply and demand picture for diesel cars.

The old fears of oversupply, following the overwhelming penetration of diesel into the company car sector, are now legendary.

The prospect of rapidly declining used values – as forecast by some of the more gloomy commentators – was always of most concern in the fleet sector. But if the prophets of doom had been right about future diesel ‘meltdown’, this would have also posed problems for dealers.

No one holding significant amounts of stock wants dramatically reducing values.

Earlier this summer we asked a large national sample of dealers: “To meet retail demand, do you need more, less or about the same amount of diesel stock as you have at present?” The largest response was 44%, who reported that their existing position was about right.

The second largest response revealed 41% of dealers were keen to acquire more diesels for stock than they were currently able to. Their customers demand the benefits of perceived robustness and economy of diesel. Only 15% of dealers said their requirement for diesels was now reducing.

Clearly there remain some strong benefits to dealers from the diesel boom. As well as simply offering what their customers want, there are additional profit opportunities to be enjoyed. Other CAP research into this issue recently revealed that customers are willing to pay a premium for imagined diesel advantages. Customers will often pay more for a small diesel – even when it offers little advantage over the petrol variant.

With the trade price gap narrowing between petrol and diesel, a premium retail price can only mean increased profit for the dealer.

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