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Diesel and Motor Trade Insurance

The Death Of Diesel And How It Affects Motor Traders

A look at the recent history of the diesel engine and how its future might affect motor traders.

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Once regarded as the economic and environmental choice for motorists, diesel has now fallen out of favour. Recent trends and statistics point to a decline that may not reverse or, at the very least, halt.

In 2001 the New Labour Government introduced new vehicle tax rates in a bid to cut CO2 emissions, with the tax rates favouring diesels leading to many motorists opting to purchase diesel cars. Former Prime Minister Gordon Brown, who at the time was the Chancellor of the Exchequer, in 1998 said: “Diesel cars should attract less vehicle tax than their petrol equivalents because of their better CO2 performance.” Before 1995 the market share for diesels was below 10% and by 2012 it was over 50%.

However three years later the attitude towards diesels began to change. In 2015, speaking to Channel Four’s Dispatches’, Barry Gardiner, who was the shadow Environment minister at the time, said: “Hands up there's absolutely no question that the decision we took was the wrong decision. But at that time we didn't have the evidence that subsequently we did have.

“We also expected cleaner diesel engines, which we thought meant that any potential problem was a lower-grade problem than the problem we were trying to solve of CO2.”

Whilst diesel engines on average perform well when it comes to CO2, they perform badly in Nitrogen dioxide (NO2) tests, which is where they fail badly. According to the Guardian, diesels produce 15% less CO2 than petrol vehicles do, however they emit four times more NO2 pollution and 22 times more particulates, which are tiny particles that penetrate the brain, lungs and heart.

Those negative stats have led to a clear change in attitude which has seen many countries announce plans to ban high polluting vehicles. Reports have suggested that such plans are in the pipeline for Netherlands and Norway. Germany passed a resolution to ban ICEs (internal combustion engine) from 2030 onward, with India aiming to become a 100% electric vehicle nation by the same year.

In July this year, France announced they will end the sale of both diesel and petrol vehicles by 2040. The UK was soon to follow with the Conservative Government announcing a £255m fund to help local councils tackle emissions.

A government spokesman said: “Our plan to deal with dirty diesels will help councils clean up emissions hotspots – often a single road - through common sense measures which do not unfairly penalise ordinary working people.

“Diesel drivers are not to blame and to help them switch to cleaner vehicles the government will consult on a targeted scrappage scheme, one of a number of measures to support motorists affected by local plans.”

In July, the Mayor of London launched a £42m fund to help remove old diesel black cabs from the capital’s roads. The Mayor, Sadiq Khan said: "London's filthy air is a health crisis that needs urgent action.

"I hope this fund helps deliver a new generation of zero-emission taxis on our roads and paves the way for the government to offer a diesel scrappage scheme so all London motorists can ditch their dirty diesels."

On the day the UK announced their 2040 ban, Auto Trader saw a 680% increase in consumers searching for electric vehicles, 170% for hybrid vehicles and 257% for petrol vehicles. Auto Trader’s Retailer and Consumer Product Director, Karolina Edwards-Smajda said: “Given the level of coverage it’s not surprising there has been a decline in searches, but despite the ongoing negative rhetoric the impact on diesel has been fairly limited up to this point. The return to growth on our marketplace is testament to not only the resilience of diesel, but also its popularity amongst car buyers.

“Whilst diesels remain a popular option for car buyers, it’s interesting to observe that at a time when the used car market is experiencing year on year growth, the ongoing negative commentary is having a slight impact on their retail value. Given the timing and the fact the slowdown is isolated only to diesel, a coincidence seems unlikely. Price is still increasing year on year, but growth is slowing, suggesting retailers are finding it harder to increase prices.”

In July, new car sales fell by 9.3%, with diesel sales falling by 22.3% compared to petrol sales which fell by only 3%. SMMT Chief Executive, Mike Hawes, said, “The fall in consumer and business confidence is having a knock on effect on demand in the new car market and government must act quickly to provide concrete plans regarding Brexit.

“While it’s encouraging to see record achievements for alternatively fuelled vehicles, consumers considering other fuel types will have undoubtedly been affected by the uncertainty surrounding the government’s clean air plans.

“It is important to remember that there are no plans to charge drivers using the latest Euro 6 models and no proposed bans for conventional petrol and diesel vehicles for some 23 years.”

The industry has begun to recognise the UK’s long term plans and concerns over diesel engine vehicles with the likes of BMW and Ford offering scrappage schemes.

Chairman and Managing Director for Ford of Britain, Andy Barratt said: “Ford shares society’s concerns over air quality. Removing generations of the most polluting vehicles will have the most immediate positive effect on air quality, and this Ford scrappage scheme aims to do just that.

“We don’t believe incentivising sales of new cars goes far enough and we will ensure that all trade-in vehicles are scrapped. Acting together we can take hundreds of thousands of the dirtiest cars off our roads and out of our cities.”

How Would A Diesel Ban Affect Motor Traders?

Moving away from diesel vehicles is probably going to mean moving towards other ways of fuelling vehicles, which probably means more electric vehicles and possibly hydrogen fuelled vehicles. The obvious obstacle to a diesel ban for motor traders is the fact that most vans come equipped with diesel engines, which means that motor traders who have vans will need to replace them in order to access parts of the country that opt to create clean air zones, which many such as Birmingham have said they are considering. 

However it’s not just a diesel ban that is coming into place as we have seen with the (proposed) London ban. Some petrol vehicles will be affected and therefore it’s worth motor traders with vehicles that will be affected looking into scrappage schemes that cater to commercial vehicles, such as the recently revealed Ford scheme.

For motor traders that work on vehicles, whether they’re repairing vehicles, or fixing them up and selling them on, then new training may need to be undertaken. This will be especially true if the electric revolution does take off. It’s worth learning the skills associated with working on electric vehicles as soon as you can. Not only will you be ready for the increased number of electric vehicles on our roads expected in the coming years, but you could also be one of a small number of mechanics in your area that can cater to motorists with electric vehicles. However it would be wise checking with the provider of your Mechanics insurance policy just to check the policy covers you for working with electric vehicles.

Motor traders that sell vehicles will obviously want to keep a keen eye on diesel trends, with old diesels likely to soon be out of favour with consumers, especially with scrappage schemes rapidly becoming available. Depending on where you are located or the location of your customers, you may see a decline in the interest of your diesel stock.

You may have even noticed it soon after the ban announcement, but is it something to worry about? The Vehicle Remarketing Association Chair, Glenn Sturley, said: “So far, our members are reporting a slight fall in trade values for newer diesels against forecasts but this has not really fed through into the retail market. This shows how all the noise surrounding diesel is only having a limited material value.

“The fact is that car buying habits usually take years to gain momentum and also take years to fall away. There are many, many people who see themselves as diesel buyers, and they will not just change overnight.

“There is a lot of noise going on around diesel which is causing some people to speculate on an unexpected decline in demand but, we believe, the picture is much more complex and less worrying. The main point to bear in mind is that there is no such thing as a single diesel car. Instead there is a whole range of Euro 4, Euro 5 and Euro 6 models, and the prospects for each of them are very different.

“At one extreme, Euro 4 vehicles are much more likely to be affected by clean air legislation and their values could fall quickly but most of these cars are now quite old and probably in banger territory. At the other end, Euro 6 vehicles meet the latest emissions regulations and, however you measure them, are highly unlikely to be hit by any new rules and regulations. These are newer vehicles and there is no concrete reason buyers won’t want them.”

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