Diesel under pressure as buyers’ preferences change

Demand for diesel cars fell by more than 21% in August while registrations of conventional petrol vehicles grew by almost 4%, according to the latest figures. Petrol hybrid and pure electric vehicles (EVs) also increased substantially, up 74.9% and 62.5%, results that are in line with Fleet Alliance’s preference for a balanced powertrain approach.  

According to the statistics from the Society of Motor Manufacturers and Traders (SMMT,) fleet and business registrations were down almost 4% for the month, compared to August 2016.

However, SMMT data showed fleet and businesses grew their share of the market, with 42,836 units out of a total of 76,433 – 56% of a market. That compares to 44,371 registrations in August 2016, when fleet and business accounted for 54% of the overall market of 81,640 units.

Year-to-date, fleet and business registrations are virtually the same as they were for the first eight months of 2016. SMMT data shows that 921,307 cars have been registered to fleet and business out of 1,640 241 units – 56% of the market. For the same period last year, 921,803 cars were registered to fleets.

However, with more than 76,000 new cars registered last month, the performance still represents the third biggest August in the last 10 years. Year-to-date, the market remained broadly in line with expectations and is down 2.4%.

The growth in the uptake of pure EVs and plug-in hybrids reflects what looks like a shift in the buying preferences on company car drivers.

A recent poll by trade publication, Fleet News, found that the number of company car drivers who expect to have a petrol hybrid as their next car is almost as high as those expecting to take on a diesel.

Asked what their next company car would be, about a third (35.1%) of respondents said diesel, while 34.2% said they will opt for a petrol hybrid vehicle.

At the same time, about a sixth (16.9%) said they will choose a petrol-powered car, while almost one in 10 (8%) had set their sights on a pure electric vehicle (EV).

This mirrors the experience of major leasing companies, who report growing take-up of petrol and petrol hybrid vehicles over recent months.

Ironically, the head of the company which first identified that vehicle emissions were higher in pollutants than manufacturers claimed, believes that electric vehicles will never completely replace diesels.

Atsushi Horiba, Chief Executive Officer of Japan’s Horiba Ltd which makes 80% of the world’s emissions testing equipment, believes that electric vehicles will never make up more than a third of vehicles worldwide, because it is not feasible to build the scale of infrastructure to enable above that level of battery-powered cars.

Vehicles with internal combustion engines, including those using diesel, will continue to have a place, particularly in emerging markets, he says.

Fleet Alliance’s view is that fleet operators need to take a balanced view to the mix of vehicles on their fleet and that diesel, petrol, and hybrid powertrains all have a role to play.

While petrol definitely has an increasing influence on the fleet mix, thanks to the improved fuel economy of the latest generation of petrol models, in many instances, especially for high mileage fleets, diesel is still the answer.

Managing Director, Martin Brown, said: “The improving fuel economy of petrol models and their cheaper list price really can help to make them as financially viable to run as a diesel.

“But not in every case. Diesel still has an important role to play, but its importance will diminish over time. What that timeframe will be is difficult to ascertain. But for now, don’t discount diesel when it’s still the most appropriate choice for your fleet.”

Brown said that diesel has been the fuel of choice for the majority of fleet operators for a decade or more for a variety of reasons, including its fuel and cost efficiency and the tax advantages it offered for drivers.

“It’s important not to become too blinkered in the prevailing emotional anti-diesel mindscape. For fleets, a balanced view is what is required.

“Diesel still has an important place in any fleet but it’s critical to evaluate all cars to see where diesel is still relevant – or where a petrol or alternative fuel vehicle might fit in.”