There is no doubt that the Dieselgate scandal has left the Volkswagen group battered and bruised, but the post-Dieselgate era also represents a new reality for the car industry in general and the second-hand market in particular. OPENLANE too has noticed a large shift in engine choice among end consumers – and this is a change that players on the second-hand market would do well to adapt to. Because, as the business saying goes, a good crisis can make for great opportunities…
A flashback to 2015: Volkswagen admits to having tampered with the emission measurements for a number of diesel cars. To do this, it installed illegal software which was able to detect the test procedures. The scandal shook one of the world’s strongest car companies to the core, and the whole VW group was slammed by public opinion. In the aftermath of the affair, other brands, both within and outside the Volkswagen group, admitted that they had engaged in similar practices as well. The diesel engine is being renounced by the general public on an unprecedented scale, at a time when alternative engines are gradually gaining in popularity. Volkswagen has cried mea culpa and is undergoing a radical shift: it has set itself the target of selling no fewer than one million electric years per year by 2025 and it hopes to achieve this through large-scale electrification of its range. Other brands are following Wolfsburg’s example and have even committed to removing diesel cars from their range altogether. But does this really mark the end of the diesel engine? No.
Supply and demand
Five years ago, in 2013, in Belgium – where the diesel car has dominated the market more so than in other countries – some 60.3% of newly registered vehicles were self-igniting. Dieselgate disrupted the market and the public once again turned to petrol engines, especially for smaller models. This is what we can conclude from European registration figures for new vehicles: in Europe, up to 17% fewer diesel vehicles were registered during the first quarter of 2018 compared to the previous year. Demand for petrol cars, on the other hand, rose by 14%, taking the market share of petrol cars to 55.5%. In addition, the historical price difference between petrol and diesel at the pump has all but disappeared, and Belgian car taxation has become less favourable for diesel cars.
Given the average age of the European fleet, the consequences are quickly becoming apparent: the second-hand market is starting to face a massive surplus of diesel cars. Especially in the A and B segments it has become almost impossible to sell diesel cars, even recent ones, while the ‘diesel detox’ is also in full swing on the private second-hand market. In short, the increase in diesel cars on the market is directly proportional to the demand for petrol cars, the game of supply and demand is taking care of the rest.
What’s your best bet?
Do you still have a considerable amount of new-ish diesel cars in your car park? Then convince your customer with hard facts: those who drive long distances still benefit from driving a diesel car. Although many people have given in to the fear of stricter emission standards and the accompanying bans on diesel cars, the self-igniter remains an interesting choice, in terms of both use and maintenance. Compare the tax costs, calculate the number of kilometres driven and prepare a forecast of the total cost of running the car. Do you think diesel cars are too risky at the moment? Then consider expanding your range with electric cars! Demand is on the up but supply remains relatively limited, which means that you can often achieve a nice profit.
The imbalance on the market is obviously more evident in markets where, in the past, diesels prevailed (too much) (such as in Belgium and France) and where governments have not made enough commitments to alternative engines. This also means that there are bargains to be found in these markets, especially since a large number of ex-lease cars are in circulation. It’s the perfect opportunity to purchase an entire fleet of diesel cars at an attractive price. Or, to finish with the words of the late Johan Cruijff: every disadvantage has its advantage…