JATO analysis of the UK diesel market
UK car registrations continue to post increases in 2017, following the record posted in 2016 when the market totalled almost 2.7 million units – but these are tough times for diesel writes Felipe Munoz of JATO Dynamics in its analysis of the Diesel Car Market in the UK.
JATO says the growth has shown an important change closely related to a regional trend that involves the consumers new preferences regarding the fuel-type. The diesel, that used to be one of the most popular fuel types in the UK and Europe, is now facing difficult times due to several reasons that include regulation and consumer behaviour changes.
Diesel cars have now to deal with more challenges and threats that have resulted in fewer registrations in the UK. Despite their volume peak in 2016 with 1.29 million units, their market share has been falling since it dropped from 50.1% in 2014 to 48.5% in 2015. Since then the trend has been negative with its market share at 47.7% last year and only 43.9% in 2017-Q1.
Registrations of diesel cars fell by 1.0% during the first quarter against an increase of 6.2% for the whole market. In fact the diesel’s share for Q1 was the lowest since the 41.7% share registered in 2009.
Traditionally, SUVs have been the main segment for the diesel fuel-type. During Q1-17, 45% of total diesel registrations corresponded to SUVs. The percentage was 41% in the first quarter of 2016, showing that the increasing popularity of these cars has benefited the expansion of the diesel in this segment. However, their volume growth (+8%) was not enough to offset the drops in volume posted by the rest of the segments.
Volume dropped by 13% for compact diesel cars (the second largest segment for diesel cars) and 4% for midsize cars. But what’s behind this trend?
The public don’t know the difference between EU6 and EU5, for instance, and so they just think all diesels are bad
The UK is one of the most dynamic markets in Europe for the Alternative-Fuel-Vehicles, AFV, which count for a bit more of 4% of total registrations. Even if they are still a rare thing to see in the roads, these cars have been posting strong annual growth for the last 10 years.
Volume jumped from 16,400 units (0.7% market share) in 2007 to 88,900 units in 2016 (3.3% market share). The continuous push on electric and hybrid vehicles, especially ahead of the tax changes that happened in April this year, allowed them to record a 4.1% market share during the first quarter of this year.
The ‘dieselgate’ created the perfect conditions for the battle against the diesel. Both the government and media have been continuously portraying diesel as the monster choking our cities.
This sort of campaign includes the threats to ban diesels from certain city centres. The measures are not intended to hit the totality of diesels, but the public don’t know the difference between EU6 and EU5, for instance, and so they just think all diesels are bad.
All of this happens at the same time petrol engines get very positive press coverage, and important players in the industry like Toyota keep pushing its hybrid range.
It is not the end of the diesel. But it is likely to become an exclusive fuel option for upper segments and premium brands. We see AFVs taking advantage of diesel’s volume reduction while petrol cars will consolidate their market dominance.
