Good or bad? It depends on your diesel perspective
05 September 2007
Depending on which auction firm you speak to, the prices for ex-fleet diesels is either being 'eroded' or 'performing well
What to make of the latest reports from the auction houses about the value of ex-fleet diesel cars? Not for the first time we are getting conflicting messages from the two big operators, BCA and Manheim.
BCA was the first to wade in, claiming that "the average price premium that diesel enjoys over petrol in the fleet and lease sector eroded completely in quarter two, 2007".
But, just as business car managers were starting to panic, Manheim came back with the more reassuring message: "Despite recent worrying reports that diesel prices are under severe pressure, our reports clearly show that, in most of the main categories, they are performing well."
Behind these two, apparently contradictory headlines, you need to look in considerable depth at the detail.
First, and most important, is the age and mileage of ex-fleet and lease cars coming back onto the market. Here the two big auction houses have very different profiles, most likely reflecting the different disposal policies of their major customers.
At BCA, ex-fleet diesel cars are both older and have done more mileage than their petrol equivalents. Typically they are coming to auction with 39 months and 68,000 miles on the clock, against petrol cars at 36 months and 45,000 miles.
At Manheim, the mileage has largely been eroded (62,000 for diesel; 60,000 for petrol) and the age profile is reversed. Diesel cars come to auction with around 36 months on the clock while petrol cars are about 39 months old.
This suggests Manheim customers work their cars that much harder, especially the petrol fleet. Across the board, they cover more ground in less time. So perhaps it is not so surprising that the two firms are reporting different results.
Also important to the analysis is whether you measure the disposal value of a car in absolute price terms or as a percentage of its list cost new. The BCA Pulse report relies on absolute price, with petrol cars averaging £7319 in Q2 against diesel cars at £7014.
The Manheim report gives both price and percentage of cost new. For typical ex-fleet cars, this latter figure has been remarkably stable at around 39% for diesels and 33% for petrol for the last two years.
For many business car managers it will be the actual value difference (cost at purchase minus value at disposal) that matters most. This is what the car has cost the business (in terms of depreciation) during its working life.
Tony Gannon, BCA communications director, maintains the "long-term price trend clearly seems to indicate a continued narrowing in values between petrol and diesel. This almost certainly reflects the increased numbers of diesels entering the fleet market as new cars some three years ago."
Contrast that with Rob Barr at Manheim: "It's clear that while the volume of diesels coming back from the fleet sector is increasing, prices are still holding up. Our research shows that more retail motorists are actively seeking out used diesel models."
Who you believe will probably depend on your own personal experience and the usage profile of your fleet. But it goes to show that, once again, you need to do some careful analysis before you rush off and switch to an all-diesel fleet.