Soaring Fuel Prices Accelerate Decline in Used Diesel Car Values

The value of used diesel cars is declining sharply as soaring fuel prices put pressure on demand, according to market experts. Analysis by Solera cap hpi found that the average value of a diesel car has dropped by 7% in the last 12 months, with the depreciation curve steepening notably since March.

Earlier this month, the cost of a liter of diesel exceeded £2, and it remains close to that threshold amid heightened global tensions. This surge in pump prices is directly impacting the used car market. "Diesel at over 195p a litre is difficult for buyers to ignore, particularly when they are comparing it with hybrid and electric alternatives," said Chris Plumb, head of current valuations at Solera cap hpi. He added that this trend is not only devaluing owners' cars but also making some used car dealers hesitant to accept diesel vehicles as part-exchange.

In contrast, used hybrid vehicles are demonstrating greater resilience, with their values remaining stable or increasing. "For many buyers, hybrid offers lower fuel costs without requiring a change in how they use or refuel their car, and that is supporting demand and values," Plumb explained.

Data from Solera cap hpi shows that in October, diesel values experienced another 0.6% decline for three-year-old vehicles with 60,000 miles. This marks the fifth consecutive month where diesel has been the weakest-performing fuel type in the used car market. In the same month, conventional self-charging hybrids saw a 0.5% increase in value, while fully electric cars rose by 0.3%.

The increased time diesel cars spend on dealer forecourts also indicates a slowdown in sales. In September, diesel cars took an average of 41 days to sell, compared to 32 days for hybrids and 33 days for electric vehicles (EVs). Despite the pressures on diesel, the broader used car market remains relatively stable, with average values at three years old and 60,000 miles falling by only 0.3% in October.

"The figures suggest the fuel crisis is creating an increasingly divided used market, with buyers placing greater weight on day-to-day running costs and hybrids emerging as one of the main beneficiaries," the company stated.

Interest in new diesel models has also significantly decreased. Carwow reported a 33% drop in requests for test drives of new diesel models between March and the end of September. Demand for new petrol cars fell by 25% during the same period, while hybrid inquiries decreased by 8%. Conversely, inquiries for EVs surged by 28%, indicating a potential acceleration in the shift away from traditional combustion engine vehicles.

Further data from Carwow shows that interest in diesel vehicles continues to decline, with inquiries down an additional 14% in the last week compared to the previous one. Diesel cars currently account for fewer than one in 20 new car registrations in the UK this year, and the number of diesel models available to consumers is shrinking.