The B-, C- and D-Segments in Europe are currently dominated by Diesel. In Germany, for example, Diesels constituted >80% of the D-Segment in 2016, with alternative fuelled vehicles making up only around one half of one percent of the overall volumes sold (Source: KraftfahrBundesamt – December 2016).
However, in the aftermath of the emissions scandal, and with growing pressure on emissions levels – including the likelihood of cities including Paris, Madrid and London banning the use of diesel vehicles by 2025 – it is envisaged that within the coming 5 years there is likely to be a significant shift towards Petrol and Hybrid Electric vehicles.
Alix Partners’ research into forecast powertrain mix forecasts that HEV sales will represent some 10% of overall market registrations by 2020, and around 15% by 2022, with Diesel falling by around 15% and Petrol by around 5%. There is already some evidence of the shift towards Hybrid Electric Vehicles starting to take effect in the German D-Segment, with HEV representing 1.1% of 2017 registrations, with the prime seller in the German Market being the Passat Hybrid.
Experteye’s MarketEye / ManufactureEye study collects Residual Value forecasts from leading leasing companies in 6 major European markets. The data is sourced directly from the leasing companies, and therefore reflects a unique and dynamic view of the underlying trends influencing pricing in the fleet market.
Experteye have observed a clear trend across the combined markets indicating that the gap between RV forecasts for Petrol and Diesel vehicles has narrowed considerably in the last few years (averaging 0.48 percentage points per annum).
However, in each individual market, the picture is less straightforward, with some markets showing an increase in the variance between Diesel and Petrol RVs.
The gap between Diesel and Petrol in France and Portugal in January 2015 was more significant than the other featured markets (a variance of in excess of 6 percentage points in each of these markets).
In France, there has been a clear and gradual narrowing of the RV gap from over 6 percentage points in Jan 2015 to approximately 1 percentage point in July 2017. A similar result is observed in Portugal, albeit with more pronounced drops followed by longer periods of stability.
In Spain, and Germany the gap was much smaller in 2015, and has remained relatively static throughout this period.
In Italy – where the RV gap started in a similar position to Spain and Germany (Diesel RV’s 2ppt higher than Petrol), the gap has actually widened to nearer 4ppts.
In the UK, the gap started in 2015 with Diesel RVs around 2ppt LOWER than Petrol. This gap has narrowed to approximate parity of Petrol vs Diesel RV forecasts in Q2 2016, and the trend has remained relatively static to date.
The data used in this summary are for 36 month contracts. It should be noted that 3 year contracts signed in 2022 will be hitting the used car market in 2025, when the new vehicle mix is predicted to be around 40% “Alternative powertrain” (Hybrid, Plug-in and fully-electric).
The effect of this shift is difficult to quantify with accuracy – but we anticipate that Leasing Companies in all European markets are likely to take an increasingly cautious approach with Diesel RV’s in particular from 2020 onwards.