Diesel Climbs Back into Favour in Used Car Market

Market sentiment in the second hand car sector is turning back towards diesel with trade sources indicating that both demand and prices are rising.

A report from cap hpi says a large influx of three-year old diesels returning off 2016 PCP contracts will push up volumes of stock but rather than depressing values, says it expects this to be balanced by consumer demand with buyers less likely to be bothered by company car tax issues and more concerned about diesel’s better fuel economy.

It said: “There will be an increase in supply of used diesel cars coming onto the market until 2020, as a result higher registration volumes up until 2017. However we expect demand will meet this supply, unless there is widespread implementation of city charging zones for diesel cars in this period, or significant government legislation changes affecting the running costs of diesel cars. We do not consider either of these actions to be likely.

Used Diesel Values Hold Up

“Contrary to the new car market where diesel share has declined sharply, used diesel values have continued to hold up well as demand has continued to meet supply.”

Remarketing specialist, Autorola, says its records show a 5.6% rise in diesel values during Q1 to an average of around £13,250, the highest Q1 figure since 2015. Prices rose by £704 despite an average quarterly mileage increase of 639 miles to 28,068.

Jon Mitchell, Autorola UK’s group sales director, said: “Demand for diesel has been very strong across the board, everything from Focus to SUVs, resulting in a strong quarterly price performance.”

New Challenges

The used car market generally has been skewed by the impact last year of WLTP on the new car sector and fleets holding onto their cars for longer than usual while industry waits to see how Brexit plays out. It is set to be a very competitive year though as big franchised groups try to drive more profit from extra second hand volume to offset the likely slowing in the new car sector and a squeeze on their margins.

James Tomlinson, Chairman of the National Association of Motor Auctions, said: “The used car market has generally performed in line with our expectations in the first quarter of 2019. Values have remained stable, and there has been a steady stream of buyers bidding competitively across all market sectors, both at auction and online. We are expecting this buoyant market to continue into Q2.”

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