Many of you will have read recent articles predicting the demise of the diesel engine and the possible concerns that owners, and indeed dealerships, may have should the current ripples turn into a tidal wave.
Industry rumbles can precipitate a reaction from the public; we saw an example of this with 4 x 4 product a few years ago, with a ‘rush to sell’ by many owners.
So, could a similar type of worry start a diesel exodus, and if it were to happen how would the industry and dealerships handle the matter?
We’ve also heard statements like, ‘time bomb’ and some industry figures saying they ‘wouldn’t buy another diesel car’. Last month, diesel vehicle prices fell 19% in Germany. Is this an indicator of what’s to come?
The Volkswagen emission debacle is still raw for many and this dramatic misdemeanour undoubtedly raised the flag of worry for many current and potential owners.
Once the ripples start they can continue and spread for a long time, damaging both individual products and manufacturers’ reputations - and crucially, public confidence.
Equally there is no evidence yet that prices, or indeed demand, for diesel products is under threat. The trade value guide ‘CAP HPI Black Book’ sees no evidence of concerns or dramatic price changes at this time.
Many feel that diesel engines will just quietly disappear as new power options arrive and gain acceptability from the buying public, and that petrol engines will just ease back to the one-time supremacy they enjoyed.
Government pressure as always, will have its say as more cities apply stringent charges based on pollution concerns. Talk of up to £200 per month in city charges will put off even the most committed diesel commuter.
Should the flood gates open and people rush to ‘dump the diesel’ what might dealers expect to see?
The trade-in value of diesel product would drop through the floor, potentially leaving many owners in a ‘negative equity’ position. For example, remember that 38% of cars on the UK roads are diesel with many owners having chosen diesel product on the basis that it would be cheaper to run, cheaper to tax and, potentially, easier on the environment. The influx of unwanted diesel products would create worries and real problems for dealers.
The desire for petrol replacements would not be covered by available stock, with used petrol car stock suddenly becoming much more expensive, and what would become of the many now unwanted used diesel cars? Dealers would be faced with difficult dealing situations of trying to ‘dig out’ owners from current finance deals that may well be showing negative equity. Then there would be the worry of fast depreciating stock absorbing operating money and applying dreaded cash flow pressures that all dealers will want to avoid.
The more astute operators will look to have a strategy in place for handling diesel cars in the future. Dealers will need to provide owners of diesel cars with a 'safe haven' approach by inviting them in a positive way to come and find out how they can change their pariah status. The developing hybrid market looks even more like a good bet as users find their hand forced a little.
Dealers will need to keep close to this subject as it unfolds and be prepared for some turbulent trading times should diesel become the outcast that many suggest.
Of course, some users will always see the value of diesel. The high mileage business person will still favor the increased ‘miles per gallon’ offered by derv, and those that tow heavy loads will still crave the torque offered by the diesel engine.
Whilst both groups will want to support the fuel type, the vast majority of road users won’t see, or need those benefits, and will revert comfortably to petrol over time.
Interesting times again for the automotive world.
Maybe when we are all being driven around by droids in vehicles powered by garden rubbish things will be easier!