AM Online

CAP trade watch: Keeping track of the diesel trend

With the change in balance between petrol and diesel originally sparked by the introduction of CO2-based company car taxation in 2002, we have constantly tracked the impact in the used market.

Because the taxation benefits are removed in the used market, there has always been an element of uncertainty over where values would head as diesel supply increased.

One of the key drivers of that is retail appetite, so CAP regularly investigates the balance of supply and demand to assess the current and future prospects of the used diesel market.

In the latest survey of retail used car dealers a picture emerges of continued expected growth in the diesel sector. For example, only half of dealers surveyed were currently able to source sufficient diesel cars to meet customer demand, while 40% said they would like to find more.

Perhaps more striking is the fact that more than half believe that demand for diesels will continue to rise during 2007, while the remainder expect there to be no change. There were no predictions of reduced demand for diesels.

Many dealers are enjoying retail success now with small diesels, despite the demonstrable fact that paying significantly more for a small diesel than its petrol equivalent does not pay, unless very high mileages are covered.

Currently this is the experience reported by 30% of dealers, although the majority suggest that margins on diesels are now about the same as petrol.

In terms of trade values, about half of dealers expect diesels to become more expensive to source than petrol equivalents this year. Bearing in mind that a few years ago there were warnings from some quarters that the rise of diesel would lead to residual values meltdown, the picture remains reassuringly upbeat.

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