Demand for defleeted diesel cars remains “strong”, but the outlook is “uncertain”

Demand for defleeted diesel cars remains “strong”, but the outlook was “uncertain”, according to the latest monthly report from automotive data provider Glass’s.

New diesel car registrations in 2017 were down around 17% year-on-year, but said Glass’s, vehicles registered before April 2017 were subject to the country’s older excise rates, based on CO2 emissions, which meant that buyers opting for diesel paid a more financially favourable tax rate, with some vehicles costing as little as £30 per year.

The report continued: “Used cars are taxed based on the tax band that applied when they were first registered, and so diesels remain a popular choice for cost-sensitive used buyers due to their greater fuel economy. The used car market data shows demand for diesel vehicles remains strong.”

Following a spike in residual values early in 2015, trade values of both petrol and diesel cars after 36 months/60,000 miles as a percentage of their original price fell and subsequently diesel cars typically underperformed their petrol-engined rivals.

Glass’s anticipates that trend will continue in the short to medium term largely due to the media’s ‘demonisation’ of diesel.

However, said Glass’s: “In the long term, if diesel registrations continue to fall away at similar rates as they are currently, there is even a risk that the used car market will ultimately be oversupplied with petrol vehicles but not enough diesels. This would naturally help keep diesel values higher and would also have a negative impact on the values of petrol vehicles.”

But, the report continued: “However, this is an unlikely scenario as demand for used diesels is expected to wane and so the outlook for diesel residual values remains uncertain.”

Overall the used car market remains buoyant with data for ex-fleet and lease cars sold by remarketing giant BCA showing hammer values close to record levels.

However, there continues to be a two-tier market in operation with ready-to-retail cars continuing to attract buyer’s attention and selling quickly for top money. Meanwhile, experts advise that poorer condition, older and higher mileage examples need to be accurately appraised and valued in line with market expectations if they are to be sold first time.

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