Diesel Cars Were Over-Hyped and Are Losing Value
Restrictions Being Placed on Diesel Pollution In Cities
I originally wrote this article back in 2015 when I predicted that diesel car owners were set to see the cost of running their cars increase and values plummet as a result. Just over two years later I was proven right when local government authorities started to put pressure on the government to allow them to charge up to £25 a day for a diesel car to go into city centres, or ban diesels and older cars completely.
And in Germany, in February 2018, the Federal Administrative Court in Leipzig announced that the cities of Stuttgart and Duesseldorf could legally ban older, more polluting diesel vehicle in a bid to reduce pollution. It is expected that more cities will apply for the ban and it's expected that other European countries will follow suit.
The Recent History of Diesel Motoring in the UK
In the early to mid-1990s, diesel cars were hailed by the UK Government and vehicle manufacturers as being the future of motoring. We were told that diesel engines were more efficient, cleaner and more economical than petrol vehicles. Over the next 20+ years Great Britain saw a massive shift from petrol to diesel-powered vehicles as millions of businesses and consumers made the switch. Diesel fuel was cheaper than petrol in the early 90's, but as more and more diesels hit the roads the price of the fuel slowly overtook petrol.
By the end of the 1990's vehicle manufacturers had begun to produce superb diesel engines which offered bags of torque and excellent power. My own car—a 1999 Volkswagen Golf GT TDi—had an excellent PD engine which produced 130bhp, provided 50+mph and would leave the petrol equivalent standing.
However, in 2014, it was revealed that the hype surrounding diesels had been misleading and it is now understood that diesel engines produce more harmful emissions than petrol. We had, for decades, been misled.
In September 2015, it was revealed that Volkswagen and the Audi group had falsified pollution test results, news that shook up the future for diesel cars forever.
By 2014 it was becoming more evident that pollution from diesel cars was on the increase. Not just because there were more diesel vehicles, but because the emissions produced by diesel cars were more poisonous than those from the equivalent petrol engine.
For decades car manufacturers told consumers that diesel cars were the answer: less polluting and with a higher MPG. Actually, consumers were lied to. Diesel engines product far more damaging particles, linked to respiratory problems and increased deaths.
In September 2015, the VAG Group (Volkswagen Audi Group), who own brands including VW, Audi and Skoda, admitted that software in its diesel cars helped them beat engine emission tests in the United states. This issue sparked concerns across the UK and Europe and affected the values of second hand and nearly new vehicles. Within days, second hand values began to plummet in the US with customers refusing the take delivery of new vehicles and the market suddenly being flooded with second hand German diesel cars.
Road Tax on Diesel Cars is Increasing
In November 2014 a group of British lawyers collectively calling themselves 'ClientEarth' took the UK Government to the European Court and won a ruling which stated that the UK must clean up its act in relation to pollution caused by motor vehicles. The Court asked the EU to make recommendations on how this could be achieved and it is widely believed that an increase in road fund licence (road tax) is the easiest way for the Government to discourage the use of diesel vehicles.
Evidence Linking Diesel Particles to Health Issues
Apart from the obvious issue with diesel particulates causing breathing problems, there is also new evidence which suggests that they double the risk of autism. In addition, Wikipedia lists numerous issues surrounding diesel and health including cardiovascular disease, cardiopulmonary disease, and lung cancer, decreased cognitive function in older men, and increased risk of heart attack in the general public.
The gap between petrol and diesel prices has begun to widen
In early 2014 the UK Government was also under fire for failing to tackle pollution and faced a £300 million fine from Brussels. A way for the Government to increase revenue on fuel is to simply increase the duty on diesel. Millions of vehicles including cars, vans, buses and lorries use the fuel and an increase in duty is an obvious way forward.
Even with the price of crude oil falling at the start of 2014, consumers will continue to see the price gap between petrol and diesel increase.
Residual Values of Diesel Vehicles Will Plummet
As a car salesman around 2002, I witnessed a drop in the values of big secondhand vehicles as the Government heavily increased the road tax for cars with large engines and high commissions. Suddenly, vehicles that people desired with big 3-litre V8 engines came with much higher tax, and with the increase in petrol from 80p a litre to over £1 many people were forced through taxation to sell their big-engined cars. This flooded the market with a large range of this types of vehicles, and as demand dropped, so did values.
It is inevitable that history will repeat itself with diesel vehicles if the Government goes ahead with increasing the cost of taxing and fuelling a diesel car and we can expect to see the used vehicle market in the UK flooded with diesel vehicles that no one wants.
But the problem could be even worse this time. Diesel vehicles generally cover more miles, because diesel is the preferred fuel type for fleets, and high-mileage vehicles are less desirable, so it's likely the market will be flooded with high-mileage, expensive-to-run vehicles reducing residual values even more.
Start looking at alternative vehicles now
There is likely to be a huge shift towards cleaner vehicles over the next 5 years as more pressure is placed on Governments and cities to reduce emissions. The last 10 years has see an increase in the number of hybrid cars on British roads but as a country we are still to fully embrace alternative fuel cars, or electric.
All alternative fuel cars are expensive compared to their petrol or diesel equivalents, but as the technology improves the cost will begin to reduce.
Some professionals have called on the British Government to introduce a scrappage scheme to get older diesel cars off the road. Whatever the answer, owners of older diesel cars can expect the cost of their motoring to increase exponentially over the next 5 years.
If you own an old diesel car it's time to start thinking of an alternative.