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Why diesel is worrying more consumers than Brexit

Why diesel is worrying more consumers than Brexit

Diesel has become a dirty word in some quarters with the Government’s fervent campaign to ban diesel cars by 2040 – but what effect is that having on car buyers? SMMT monthly figures for new car registrations show a bleak picture for diesels. The year-to-date stats from January to May this year reveal that the market share of diesel new cars is 32.8%, compared to 44.1% at the same time in 2017.

By May last year, 510,421 new diesel cars had been registered, but this year, that figure stands at 354,251 – a significant slump of 30.6%.

Our insight into the motor finance world reflects this change in the new car market, however for used cars, a more complicated story is emerging.

Paragon’s Headlight Survey of the UK’s largest motor finance brokers is a real asset in revealing the views from car showrooms and forecourts, and our latest findings were very clear. They showed that there is still demand for buying diesel vehicles, predominantly in the used car market, but consumer confidence had been knocked by the Government’s announcements to bring an end to diesel and even hybrid vehicles within a generation.

It’s not often that we get every broker agreeing on a topic, but in this rare case, 100% of our brokers surveyed blamed uncertainty over what fuel type to buy as the reason for weak car buyer confidence. In fact, our brokers reported back that diesel was more of a concern now for consumers than ‘Brexit’.

Amid a time of such intense change, all that seems to reign is confusion. Despite all the bad publicity around diesel, what’s emerged is that the diesel used car market is still strong. That says to me that consumers still want to buy them and that could be because they can maybe pick up a bargain, or possibly because there is, as yet, still not a viable alternative.

This stems from a lack of understanding about fuel types and the risks they pose. This has also been compounded by manufacturers’ research and development into alternative fuel vehicles(AFV) being well behind the curve, meaning consumers have little choice when looking at an AFV purchase.

One in three of our brokers reported increased applications for used cars over the six months from November 2017 to April 2018 to the previous year with a further third saying sales were at the same level.

There’s also a promising outlook for used cars with 43% of our brokers expecting more applications in the next six months and another 41% expecting similar sales. Although not all of those vehicles will be diesel, a fair portion are sure to be, which means that the brakes haven’t been put on diesel as yet.

In the public’s eye, diesel still seems to be an attractive option for those buying second-hand and that is unlikely to change until a clearer picture emerges from manufacturers and politicians to unmuddy the waters.

27 June 2018

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551

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