2017 will be seen as a pivotal year in the automotive market’s acceptance that diesel technology is no longer the dominant power it once was. Declining market shares, government interference and financial realignment into alternative fuel development all signalled the decline in what was once deemed the environmental saviour of the industry.
The issues that began the decline of diesel did not start in 2017, but can be traced back to the 2015 Volkswagen (VW) Dieselgate scandal. However, out of the public eye, the situation can be traced back to the Euro 5 engine regulations first introduced in 2009, when strict guidance on emissions standards, particularly nitrogen oxides (NOx) meant vehicles needed to be fitted with diesel particulate filters as standard. To meet even tougher regulations, VW programmed vehicles to cheat tests in the US, with a different emissions profile to those used on the road. Once this was uncovered, diesel’s downfall began.
Autovista Group covered stories related to diesel a total of 292 times in 2017, making it our most popular topic.
Germany is the home of diesel technology, and with a large proportion of its workforce based within the automotive industry, has a vested interest in its survival. Therefore, while the country was preparing to go to the polls in national elections, the government arranged a ‘diesel forum’ to gather industry leaders and experts together. The result was a recall of 5.3 million vehicles to implement a software ‘fix’ which would aid emission profiles, and manufacturer-backed scrappage schemes to encourage drivers of older polluting vehicles to move into greener alternatives. The fix had been proposed in July 2017, with German manufacturers developing it together, although at that time there was a question over who would absorb the cost of potential recalls.
The forum was a response to state governments proposing a ban on diesel vehicles entering cities, with Cologne, Munich and Stuttgart all suggesting such a course of action to aid their air quality. The initial forum was followed by a second meeting, which also sought to allay fears of such bans.
However, these threats were nothing compared to the news from both France and the UK, with both countries announcing that conventional petrol and diesel powered new vehicles would be banned from sale in 2040. These plans will allow the countries to improve their air quality ratings following damning reports from the European Commission.
The decline of diesel could be seen in the falling sales around Europe. In April, registrations of new diesel cars in the UK and Germany fell by 27% and 19% respectively, and despite some increases in monthly sales, the two country’s market shares never picked up. By November 2017, diesel sales were down by 16.1% in the UK. Furthermore, figures released by the European Automobile Manufacturers Association (ACEA) revealed that the market share of petrol vehicles in Europe had overtaken that of diesel for the first time since 2009 by September 2017.
In October, a report by Standard & Poor suggested that the diesel engine share of the European automotive market will drop as low as 30% by 2030, as the technology is phased out by manufacturers and affected by negative press.
Meanwhile, later in the year, it emerged that falling diesel sales could cause manufacturers to miss the 2020 CO2 reduction targets set out by the European Commission. While emitting high levels of NOx, diesel engines produce less CO2 than their counterparts. Carmakers were, therefore, relying on higher sales of the technology against its petrol counterpart to meet the targets; however, with a slow uptake in electric vehicles, consumers are moving back to petrol. This means they face missing the legally mandated CO2 targets of 95 grams per kilometre, meaning they face a fine of €95 for every gram of CO2 above the limit, multiplied by the number of cars they sell in 2020.
Public opinion of diesel also waned. However, in the vehicle rental industry, issues did not put people off hiring vehicles with a diesel engine. Survey findings from vehicle rental company Europcar showed that 63% of motorists would prefer a diesel engine when hiring a car. However, 78% said they would not hire an electric vehicle (EV).
The new Autovista Diesel Intelligence report is now available, featuring key trends in the market, residual value performance and future threats and their impact. Click here for more information.