Tale of two markets

Jonathan Brown

23 Mar 2018, Blog Post

The tale of two markets

The unpredictable impact of Brexit has created a tale of two car markets. On one side, discounts on new cars are commonplace with scrappage schemes and deposit contributions, whilst on the other, in the used car market, prices are continuing to rise. Counter-intuitively, the sales of new diesel engine cars slumped in 2017 and 2018, whilst prices for used diesels and particularly medium and larger diesel cars, rose.

Phenomenon explained

Jonathan Brown, Car Editor at automotive intelligence provider Glass’s says that it became clear last year that drivers were wary of buying new diesels. Relentlessly bad press, coupled with government hostility and increased road tax, drove sales of new diesel cars down by 17.1%.

Brown believes the situation is only likely to get worse, despite the fact that new diesels are among the cleanest vehicles on the road. In January this year new diesel sales were 25% down on the same month last year.

So why then are buyers snapping up older medium and larger diesel cars at auction, most of which do not meet the latest Euro6 emissions standards?

  • Diesels are much cheaper to run then equivalent petrol cars
  • Higher mileage per gallon on motorways than equivalent hybrid cars
  • Longer service intervals
  • The new ultra-low emission zone (ULEZ) in London does not start until 2019
  • ULEZ only covers the inner core of London where the Congestion Charge is levied
  • Other low emission zone city implementations are several years behind London

Effectively drivers are calculating that they can get three to five years out of a used diesel before they need to start worrying about not being able to drive where they want. Glass’s Editors regularly attend car auctions held across the UK and report that this phenomenon is commonplace.

 Industry consultation

Brown wishes the government had consulted industry experts before bringing forward its anti-diesel measures. “There are two sides to the argument,” he says. “Targeting the worst offenders makes perfect sense – pre-2006 diesels are definitely very dirty vehicles. However, the latest Euro6 diesels are among the cleanest cars on the road with very low CO2 emissions and, thanks to AdBlue, reduced NOX emissions too.

The Society of Motor Manufacturer and Traders (SMMT) says drivers buying more petrol cars in 2017 are partly to blame for a rise in carbon dioxide emissions from new vehicles. The 0.8% increase, to 121 grams per kilometre, is the first rise since the SMMT began reporting levels in 2000. CO2 emissions from fuel-efficient diesel engine cars are typically up to 20% less than equivalent petrol emissions.

At the auctions

Currently, nearly new cars are struggling to sell at auction because dealers know they will face competition from discounts on new cars. “It has become a two-tier used market with anything on a late plate over £8,000 finding it tough while quality high mileage small cars are making good money.”

About the author

Jonathan Brown

Jonathan BrownUK Car Editor

Originating from Farnham in Surrey, Jonathan was educated at the Guildford and Farnborough Tech Colleges before he acquired his expertise in manufacturer and dealer network liaison. Jonathan is one of many who has built a colourful and lengthy career with Glass’s having joined the company back in 1989.