Fleet chiefs must select right car for the right job, says FSGB, as ‘war on diesel’ intensifies and manufacturers axe models

Fleet decision-makers must remain focused on operating the right cars for the right job amid media hype surrounding the ‘war on diesel’.

The so-called ‘demonisation of diesel’ by a largely ill-informed national media has been blamed for the slump in new car diesel registrations – down 17.1% last year and 24.9% in the first two months of this year, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

The organisation has blamed the dramatic decline in diesel demand – fleet’s favourite fuel this century – on a variety of factors including: recent government changes to vehicle taxation, air pollution concerns and the Volkswagen Group ‘dieselgate’ emissions cheating scandal.

However, a number of manufacturers are moving away from producing diesel cars as buying habits change with Toyota the latest to announce that it will axe all diesel cars from its model line-up by the end of 2018.

However, the SMMT has also highlighted that the anti-diesel backlash – alongside the slow take-up of electric vehicles – means that the UK could miss its environmental targets. Last year new car tailpipe emissions increased for the first time in two decades as the drop in diesel demand heralded a move to petrol models that consume more fuel than diesel equivalents and emit, on average 15-20% more CO2, the SMMT said.

SMMT chief executive Mike Hawes said: “The industry shares government’s vision of a low carbon future and is investing to get us there – but we can’t do it overnight; nor can we do it alone. The anti-diesel agenda has set back progress on climate change, while electric vehicle demand remains disappointingly low amid concerns around charging infrastructure availability and affordability.

“To accelerate fleet renewal, motorists must have the confidence to invest in the cleanest cars for their needs – however they are powered.”

That said the SMMT, included today’s new breed of Euro6 compliant diesel engines.

The UK government last year said it would ban the sale of new diesel and petrol cars from 2040 – although not hybrids – with the Scottish government saying it would make a similar move from 2032.

How sustainable the switch back to petrol will be would be heavily influenced by legislators and the most vocal lobbyists, according to the latest analysis by automotive industry analysts and consultants Experteye.

Commenting on last year’s UK rise in new car carbon dioxide (CO2) emissions, Experteye’s newly published ‘European Automotive Report – 2nd half 2017’ report said expectations were for a further rise in 2018 as new car petrol sales gathered further momentum and the diesel decline continued.

The report said: “The challenge legislators across Europe need to get to grips with is that this is not a single issue with a one size fits all solution. Even electric vehicles create environmental issues, whether it is the potential for increases in greenhouses gases in countries like Germany and the UK, which rely heavily on fossil fuel electricity generation, or the drain on rare minerals like cobalt and lithium. Any government or European-wide strategy needs to listen to all sides and not follow the loudest voices to avoid yet another knee-jerk reaction.”

However, the Experteye report warned: “With some of the tax benefits being removed and new charges coming in, the decision about diesel has once again started to have more to do with function and need.”

Fleet Service Great Britain’s message to customers to focus on ensuring they acquire the right new cars for the right operational reasons and don’t get blown off course by media hype comes with a number of vehicle manufacturers announcing that they will be ending the production of diesel cars.

Last year Volvo said it was to stop manufacturing petrol and diesel cars with all new models fully electric or hybrid by 2019. It was the first mainstream carmaker to make the move (The Buzz; July 2017).

This year it has been followed by Porsche, which, while diesel accounts for a small proportion of sales, has confirmed the axing of diesel models from the Macan SUV and Panamera ranges, although the new Cayenne is still expected to feature a diesel powertrain. Nevertheless, it is a clear signal that the manufacturer sees its future based on the sale of petrol and electric models.

Fiat Chrysler has also announced that it will end diesel car production by 2022, following a drop in European consumer demand in the wake of the ‘dieselgate’ emissions cheating scandal that hit the Volkswagen Group, which includes Porsche.

While on the eve of this month’s Geneva Motor Show Toyota said that it would phase out diesel from all its passenger cars in 2018 due to ‘strong customer demand’ for hybrid electric vehicle versions of its core models. The decision makes Toyota the second mainstream motor manufacturer – following Volvo last summer – to announce that it is to axe diesel cars from its powertrain line-up.

In 2017, hybrid electric vehicle accounted for 41% of Toyota Motor Europe’s total sales, an increase of 38% year-on-year to a total of 406,000 units. By contrast, the diesel mix for Toyota passenger cars was less than 10% during the same year.

However, Toyota will continue to offer diesel engines in commercial vehicles including Hilux, Proace and Land Cruiser to meet customer needs.

Johan van Zyl, president and CEO of Toyota Motor Europe, said: “Toyota has been pioneering hybrid electric vehicle technology for more than 20 years. For several years, hybrid electric vehicle have been the dominant powertrain where they have been offered.

“In our latest new model, the Toyota C-HR, hybrid electric vehicle accounted for 78% of sales last year.

“As part of our electrified vehicle strategy, we are progressively expanding our hybrid electric vehicle offering with a second, more powerful 2.0-litre engine. Starting with the new generation Auris, this expanded hybrid electric vehicle line-up is a natural reaction to our passenger car customers’ demands.

“Toyota’s hybrid electric vehicle mix in passenger cars reached equality with the diesel mix in 2015. Since then, hybrid electric vehicle sales have substantially exceeded those of our diesels. In commercial vehicles, where personal and business needs, for example, torque and payload, remain, we will continue to offer the latest technology diesels.”

Meanwhile, Honda’s new CR-V SUV will not be available with a diesel option, although a hybrid powertrain will be available for the first time. The car was revealed at this month’s Geneva Motor Show with first deliveries of models fitted with the 1.5-litre VTEC Turbo petrol engine expected in the autumn with hybrid models following early in 2019.

Finally, amid the switch away from diesel, the Experteye report warned that there could be reduced second-hand demand as fleets and leasing companies defleeted smaller diesel cars, which are traditionally bought by private consumers.

The report said: “With that in mind it is unsurprising to see the residual value setters generally continuing to reduce residual values on smaller diesels like the C segment.”

The report continued: “The smaller MPV and SUV segments are also starting to reflect a change in residual value setters’ approach as the industry moves away from incentivised diesel to a wider mix of powertrains, as concerns grow about future demand for used diesels in the market place given the sharp decline seen in new diesel sales.

“The media reporting of ‘dirty diesel’ has pushed buyers away from replacing what are dirtier older diesels with clean and efficient Euro6 engines and instead encouraged the sale for petrol powered vehicles which has resulted in the first increase seen in CO2 emissions since almost the start of the century in a number of countries. Thanks to political grandstanding the downward trend shows no sign of stopping and we may soon be back to the circa 32% diesel market share we saw in 2000.”

The report concluded: “As expected, residual values have remained relatively stable at an overall level across most of Europe and this is going to continue through 2018 and 2019 but the devil is in the detail.

“Petrol residual values have been on the rise as residual value setters see the change in the demand in the new car market, whilst diesel values have remained stable in some markets and falling in others. As 2018 progresses we expect to see this divide widen, however with diesel making up the majority of fleet vehicles we expect the overall impact will be a fall in the Residual Value Index of a percentage point or two this year and again in 2019.”

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