Diesel premiums vary in today's market
Wednesday, April 01, 2009 |
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Fleet News asked:
1. What is CAP's view on the declining gap between used diesel and used petrol cars? According to BCA it has halved from a £1000 premium for a used diesel car this time last year to just £500 now.
2. Do you expect this narrowing to continue?
3. What is driving it (is there an oversupply of ex-fleet diesel cars considering the majority of fleets now specify diesel)?
4. Any wider comment on whether it is worth paying for that initial diesel premium if you are not going to get it back when you dispose of a vehicle?
5. What is the typical premium is for a new diesel compared to a new petrol model? If that price difference has narrowed in the showrooms then should we expect that gap to have narrowed at re-sale time. If not, then why is it happening?
CAP’s measure of comparative petrol and diesel performance does not reveal any across the board change in the relationship. In some cases there has been a reduction while in others a slight increase has taken place.
Take the example of two core models; a 36/60 Ford Mondeo 2.0 TDCi LX has seen its premium rise over the equivalent 1.8 LX petrol from £600 to £650 over the last 12 months. In the case of a Volkswagen Passat, the premium for the1.9 S TDi over the 1.6 S petrol has reduced from £1650 to £1300. Despite the fact that most corporate fleets are now more than 80% diesel used car buyers remain sufficiently convinced of diesel’s benefits to ensure there is no comparative oversupply.
The economic case for diesel in the used market remains very strong, despite the doubts that have occasionally been cast with claims that unfeasibly high mileages are required to cover the initial premium cost. In truth it varies greatly by model. For example the annual figure for a 3 year old Vauxhall Corsa diesel is 4,000 miles. For a Ford Focus diesel it is 14,700 miles at today’s pump prices.
Some models still carry a sufficiently high premium, however, that the economic benefits do take much longer to accrue. In the case of a BMW 3 Series diesel the driver has to cover 29,000 miles annually for three years before the benefits are felt.
ends
Note: A chart is available showing 11 core models, comparing their petrol and diesel derivatives to ascertain the mileage required to 'break even' in relation to the initial diesel premium. Contact mike.hind@cap.co.uk
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