Diesel or petrol?

Fleets of all shapes and sizes have fuelled a diesel boom over
the past three years, largely driven by tax incentives for reduced
CO2 emissions and more fuel efficient vehicles that benefit fleet
operators.

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Historically, diesels have always enjoyed relatively higher
values on a like-for-like basis with petrol models. This has been
based on a higher initial purchase cost, relatively limited numbers
and high demand. But has that changed as the diesel revolution
gathers pace?

Examining average BCA sales data from the fleet sector suggests
the price premium that diesel enjoys over petrol in the fleet/lease
sector has been eroding, even accepting that the mileage figures
remain well apart. While diesel values were roughly 5 per cent
ahead of petrol throughout 2006, that differential narrowed – and
even disappeared – last year.

Fleet and lease sourced diesels come to the market at a much
higher average mileage and mileage-adjusted values would see a more
significant price differential. However, the price trend clearly
seems to indicate a narrowing in values between petrol and
diesel.

Depending on what the used car buyer has in mind, performance
and torque could be an issue, particularly for off-road,
utilitarian and towing vehicles, meaning the bigger diesel option
would be much favoured.

Increasingly price is the defining factor for the used buyer and
running costs are being taken into the equation. In the popular and
diverse upper-medium sector, for example, you should expect more
demand for diesel models than petrol with a corresponding increase
in value. That said, if there are relatively fewer and fewer
upper-medium petrol models in the marketplace, we might see these
rising in value in the future.

Similarly, in the executive and premium sectors, thirsty petrol
engines are generally less favoured by used buyers, with the
possible exception of performance and sports cars where petrol
remains the fuel of choice.

However, if you are buying a city car or small hatchback, the
diesel economy benefits largely disappear so petrol values are
relatively strong across the board. That said, when smaller diesel
models do appear at auction they tend to be snapped up pretty
quickly on scarcity value alone!

Looking at our Auction View data and matching like-for-like it
seems that diesel continues to hold pole position when it comes to
price.

Simon Henstock, UK operations director, BCA

Motor Finance Issue: 41 – March 08
Published for the web: March 28 08 12:3
Last Updated: March 28 08 14:9