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REMARKETING: Which fuel's gold at auction time?

Date: 20 November 2014   |   Author:

Tom Seymour takes a look at how the values for diesel- and petrol-engined vehicles compare in the remarketing arena and examines the factors that could cause the differences between them

For years, diesel has been pushed as the go-to fuel for better consumption and low CO2, but it has come under attack lately for being bad for air quality.

Diesel has been promoted to such an extent that there is a general lack of understanding with consumers about the running costs of a diesel versus a petrol car, a decision that is ultimately down to the amount of miles a driver covers.

Petrol engine technology is also pushing ahead with ultra-efficient, downsized and turbocharged units making their way into a lot of manufacturers' vehicle line-ups, but has there been an impact on the used market?

Diesels are still popular with used buyers, with the latest research from BCA's annual Used Car Market Report showing that they represented 37% of the market in 2014, up 1% in comparison with last year's report.

Diesels attract higher used values on average, but according to Simon Henstock, BCA's UK operations director, when looking at the retained value over the typical 40-month working life of a fleet and lease car, petrol cars are generally the stronger performer by 1.7 percentage points.

Over the third quarter of this year, the average diesel fleet model retained 41.8% of the manufacturer's retail price at time of sale, while the average petrol model retained 43.5% (see table, below right).
Henstock says: "Some of this is undoubtedly down to the sharp divergence in the average mileage covered during that time.

"For petrol cars it is around 30,000 miles; for diesel cars the average is nearly double that figure," he continues. But it's the higher up-front cost of diesel models that can really tip the balance towards petrol models come resale time.

The used car market has experienced a relative shortage of used diesels following the onset of recession because many fleets extended or deferred replacement cycles. That shortage means professional buyers have been bidding strongly, knowing they have an audience of retail customers ready and waiting.

BCA expects sales of used diesels to rise significantly in the coming years as the higher volumes sold over the past five years eventually enter the used car supply chain.

Low-mileage lower medium,  supermini and city cars are generally more popular with a petrol engine and it's due to the type of used customer and the mileage they do. The lower the mileage, the more sense it makes to opt for petrol.

Jon Mitchell, sales director of the online remarketing company Autorola, says that anything from Focus size downwards is in high demand with a petrol engine.

"The dealers that buy the cars are confident about them as they know the consumer is looking for overall size, value for money and running costs and are generally not covering more than 10,000 miles per annum.

"The annual mileage is key and that is why fleet owners have always been keen to opt for diesel because of improved economy. The CO2 tax system has further influenced their choice, but if the tax system switched to a NOx-based system the swing to petrol would be more pronounced."