9 August 2017

Diesel car sales to 'plummet' next year?

The demise of diesel in Ireland is already becoming apparent, with some in the Irish motor trade believing it will plunge to just 55pc of registrations of new cars in 2018, writes Brian Byrne.

That would be a lower percentage of diesel cars than in 2009. If the slide is as precipitous as it looks from now, it could cause serious headaches for the motor trade, and for current owners of diesel-engined cars.

In particular, the value of those cars when it comes to replacing them is in danger of being unexpectedly low, which could mean owners being unable to afford to change.

For the growing number of cars bought on Personal Contract Plans (PCP), it poses difficulties for dealerships and distributors which have sold them on a guaranteed residual value.

Even if the car owners won't get stung for the difference, they can't expect to continue to have an expected retained equity in their cars to use for 'recycling' the PCP for a new car.

Already with more than half of all projected sales of cars for 2017 completed, the proportion of diesels has slumped to 65.2pc of registrations.

This compares to 70.6pc of sales in 2016, before the impact of the Volkswagen diesel scandal began to hit home. Investigations are continuing into whether other brands were involved in manipulating diesel emissions figures.

Diesel cars bought by ordinary family motorists began to gain popularity in 2008, when a new Green Party-inspired Road Tax regime based on CO2 emissions was introduced here. The year before, just 27.9pc of all Irish registrations were diesels, mostly in larger cars.

In 2009 the diesel penetration was already up to 56.6pc, climbing rapidly to 74.2pc in 2012. Through 2011-2016 the proportion of diesel cars sold remained above seven in ten vehicles.

The slip began this year with an increasing number of enquiries from potential buyers about petrol and hybrid options. This was particularly noticeable in Toyota showrooms, as the company has the highest number of hybrid options across its model range.

But even models without hybrid options, the interest in petrol engines increased beyond expectation. "With our Corolla, for instance, we expected a proportion of 28pc being petrol for 2017, but it is closer to 40pc in practice," a spokesman says. "We were actually caught on the hop with the demand."

Earlier this year, Honda Ireland launched their new generation Civic with two turbocharged petrol engines, leaving a diesel version for later addition. In 2014, 76pc of Civics were diesel powered, last year that was down to 60pc.

In the first six months of 2017, hybrid accounted for 28 percent of Toyota’s total sales volume. This has increased to 34 percent for the first month of the new 172 registration period. Demand for petrol electric hybrid in the core B, C and C-SUV segments continues to grow with hybrid accounting for 37 percent of all Yaris, 51 percent of all Auris and 76 percent for C-HR sales in July. Only 13 percent of Toyota vehicles sold in Dublin currently are diesel.

A rise in fuel duty of up to 3c is widely expected in the upcoming Budget, as Government evens out the duty which currently favours diesel.