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Petrol volumes may exceed demand in used car market, warns VRA

The sudden shift from diesel to petrol cars in the new car market may see the used car market hit by petrol car oversupply in the medium term.

The VRA said diesel remains arguable the most attractive proposition for used car buyers

The VRA said diesel remains arguable the most attractive proposition for used car buyers

So said the Vehicle Remarketing Association as it highlighted that used buyer demand for petrols is not matching that seen in the new car market , with possible implications for RVs.

Latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that registrations of petrol cars increased by 23.5% in May, while diesels fell for the 14th consecutive month, down 23.6%. This gave diesels just a 32.3% of the overall new car market last month, compared to 43.8% in May 2017.

However, according to Glenn Sturley, VRA chair, this dramatic shift away from diesel in favour of petrol has not been replicated in the used car market where there is little sign of demand for used diesels falling, due to their main benefits.

In response, Sturley cautioned that there would be a corresponding, sudden influx of larger numbers of petrol cars into the used sector in the medium term but that there might not be sufficient demand to maintain values at current levels.

“At some point in the next 12-24 months, we will see petrol cars arriving on the used market in much higher numbers. Volumes for petrol supply in the last few years on some model ranges have been sub-10% of total numbers and tis figure could easily triple.

“What is largely unknown is the extent to which used car buyers will decide to buy petrol over diesel when given that option. Certainly, there is no sign that the environmental concerns that have reshaped the new car market will similarly impact on the used sector.

“It wouldn’t be surprising for a situation to develop where petrol moves quite quickly into oversupply, with there being a reduction against current prices. In fact, what may well happen in the medium term is that there is some kind of petrol-diesel parity.

“Certainly, we are not envisaging any form of fall in diesel values unless factors such as increasing taxes or low emissions zones suddenly become the norm, other than perhaps in the older, genuinely more polluting vehicles of Euro 4 and below.”

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.