Will diesel policy backfire?

  20 January 2019

diesel SUV

Those who appreciate irony may enjoy the latest example of the Law of Unintended Actions which may soon be played out in the motor trade.

Here we have a government which has committed itself to banning the sale of new diesel vehicles so our cities can become green and pleasant places where we can breathe in pure air. Yeah, right. Anyway, we all know that diesels are on death row with sentence to be carried out by 2040 and no hope of a retrial.

Or is there? Will the used car market drive a resurgence, however temporary, for diesel…?

The average used car buyer, of which I am one, doesn’t really give a stuff about company car tax or VED rates when it comes to choosing their next vehicle. We want a car with affordable running costs and when it comes to SUVs, that option can only be diesel. Petrol? Way too thirsty. PHEVs? Way too expensive.

Which is interesting given the utter dominance of SUVs in the second hand market and that translates into a healthy demand for diesels at precisely the same time sales of new ones are taking a dive. It is a little too early yet for the trickle down effect to be apparent but at some time soon the upward curve showing demand for second hand diesel SUVs will meet the downward curve showing supply and simple economics pretty much dictates a rise in values.

Enough to add a premium on new diesel SUVs? Could be, according to respected trade analyst Philip Nothard (I first came across him more than 20 years ago when he ran a D.C. Cook Renault dealership in north Staffs) who this week said the conditions are there to give new oil-burners some very attractive residual values.

And if the RVs are good enough to outweigh the higher tax on them, might that yet lead to higher demand for them on the new car market?

And wouldn’t that be ironic as politicians fell foul of the Law of Unintended Actions.

John Swift

Editor

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