ExpertEye European Automotive Report Q1 2017 | Page 27

One of the challenges facing car buyers in the UK is whether they should buy diesel after the recent
about turn by the UK government from promoting diesel to all but vilifying it. London has already
confirmed that from 8 April 2019 the most polluting vehicles will be charged an extra £12.50 to enter
London's ultra-low emissions zone (ULEZ). This means any petrol vehicles not meeting Euro 4
standards and any diesel vehicles that fail to meet Euro 6 standards will be affected. Whilst still not
fully confirmed, there is also a lot of UK press coverage of a circa £10-£20 per day surcharge or even
bans being brought in for a further 10 UK cities and an additional 25 towns.
There is also specualtion about some form of diesel scrappage scheme or grant to take older diesels
off the road or upgrade them to meet the latest emissions standards. The irony in all this is that what
we are seeing in the UK, due to the headline grabbing coming from the press and the misinformation
coming from government, is that the market share of new, clean diesel cars are in decline, dropping
from 47.6 to just 44.1 in the April 2017 YTD. At the same time the used values of older diesels is
actually remaining fairly strong and even rising for some segments as people are getting the wrong
message that all diesels are bad.
New car sales rose 1.1% in the year to April 2017 whilst Light Commercials fell 4.9% over the same
period. With the new taxation rules in place since April 2017, which produced a drop of 19.8% for the
month, new car sales growth will slow down and even start to fall and we expect a 3.6% drop over
2016 levels. RVs have risen quite markedly this quarter after the falls seen for all but Q1 of 2016, in
part this is driven by the weak pound pushing up the transaction prices of new vehicles. This trend
is not expected to continue through the summer and we expect values to flatten over the next quarter
and end the year 2pps lower. But the UK has always been a highly volatile market and the rhetoric
around Brexit negotiations in the UK and within the remaining EU could still destabilise values with a
dip of up to 7-8pp for a 6-12-month period over the next three years being highly likely.
European Automotive Report - 2017 Quarter 1
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