In many European markets, diesel passenger cars have become the default choice for many drivers. Offering a winning combination of lower running costs through greater fuel efficiency, and improved environmental performance thanks to lower CO2 emissions, governments have encouraged consumers to switch from petrol to diesel. OEMs have responded with diesel models that now match petrol vehicles for refinement and ‘drivability’.

However, it is important to remember that this is a relatively new phenomenon. As recently as the late 1990s, diesel passenger cars accounted for less than a quarter of West Europe’s new car sales but this has risen rapidly – peaking at 55.7% in 2011.

Three key factors are responsible for this growth:

1. Pressure from governments to push consumers towards diesel. This is frequently done via taxation systems, rewarding consumers through lower taxes on fuel or lower circulation taxes, for selecting a diesel vehicle.

2. Improvements in diesel technology, making diesel-engined vehicles quieter, more refined, more pleasant to drive than older diesel vehicles. This has extended to creating ‘performance diesels’. This has allowed diesel engines to be installed in a wider range of vehicles, such as sports cars and convertibles.

3. The popularity of certain vehicle-types, specifically the MPV (multi-purpose vehicle or minivan) segment (1990s-early 2000s) and more recently the SUV (sport utility vehicle) segment, where size and weight have driven consumers towards diesel variants. For example, between 1990 and 2016, SUV market share grew from 2.6% to 14%, with SUVs accounting for over 20% of
the market in five of the 18 markets in 20161.

Looking at Europe’s four largest volume markets, we see some dramatic shifts in demand between 1990 and the diesel peak year of 2011:

• Germany diesel share rose from 10% to 48%,
• France diesel share, already West Europe’s highest at 33%, rose to 72%,
• Italy diesel share rose from 7% to 55%,
• The UK, diesel share rose from 6% to 51%.

Since 2011, there has been a noticeable decline in diesel passenger car new registrations in France, Germany and the UK (but not Italy). An increasing amount of research is calling into question diesel’s environmental benefits, and we are seeing local, national and international authorities rethinking their attitudes. Consequently, consumers have become concerned that their choice may have been the wrong one, and what they assumed was a sound decision both financially and environmentally might be a financial liability, and undermining the health of fellow citizens.

This report seeks to understand the impact these changing attitudes will have on the major European markets, and will explore the following issues:

What is the outlook for the market for diesel vehicles in the big-4 European markets?

How rapidly will diesel decline in terms of new market share and used vehicle values?

What are the barriers to exit which will support diesel RVs and how quickly will they be overcome?

How will this impact key participants in the diesel vehicle marketplace (OEMs, suppliers, fleets, dealers, private buyers (new), used traders, used buyers)?

Contributors:

Matthew Freeman, cap hpi Managing Consulting

Dylan Setterfield, cap hpi International Senior Editor Forecast Car Values

Guillaume Heron, cap hpi France Forecasting Editor

Patrick Mayerhörmann, cap hpi Used Car Editor Germany

Bernhard Applehoff, cap hpi Head of Data Governance

Andrew Mee, cap hpi Senior Forecasting Editor Cars UK

Derren Martin, cap hpi International Senior Editor Current Car Values

James Dower, cap hpi Senior Editor – Cars

Toufik Aboussalama, cap hpi Car Editor – France