Diesel has a strong future, experts tell fleets at CCIA debate

Talk of diesel’s demise as the dominant fuel for the fleet sector is premature, according to industry experts.

Despite ‘dieselgate’, the need to meet EU rules on air quality and uncertainty over the future tax treatment of vehicles, the message from a panel of experts at Company Car in Action was: ‘Don’t discount diesel just yet.’

The fuel currently accounts for more than 80% of the vehicles used by company car drivers, and makes up almost half of all UK new car sales. 

However, with the debate raging about future fuel choices for fleets, diesel’s market share has begun to fall across much of Europe. Analysts at Experteye forecast a minimum of 5-10% drop in residual values in the next two years and a 15-20% drop over the next five years.

In the UK, 81,489 diesel cars were registered in May, down 20% compared to last year. Diesel registrations year-to-date were also down, by some 9%, while petrol registrations showed a 6% increase and alternative fuel vehicles (AFVs) recorded a 27% rise so far this year. 

The AFV increase was even higher last month versus May 2016, with a 47% rise helping set a new record market share of 4.4%. 

Fleet specific figures from the Society of Motor Manufactures and Traders (SMMT) showed greater growth in petrol registrations – up 17%. 

The slowdown in diesel was less pronounced in fleet, with a 7% fall, while the increase in the uptake of AFVs was practically identical (fleetnews.co.uk, June 5).  

Jayson Whittington, chief car editor at pricing experts Glass’s, said: “Petrol is the story of the moment; dealers are fielding more enquiries for petrol than they have done previously.”

However, when it comes to fleet vehicles, he told visitors to Company Car in Action’s future fuels debate that “diesel is still very strong”. 

He added: “Unfortunately, for those that wish it to be the case, diesel is not dying – diesel, I believe, is here to stay.” 

Diesel has been the powertrain of choice for most fleets after company car taxation rules changed in 2002, thanks to better fuel efficiency and lower CO2 emissions. 

But, with a shift in focus from CO2 emissions to NOx, businesses are finding it difficult to plan the future make-up of their fleet. 

The Government has hinted at tax rises after Chancellor of the Exchequer Philip Hammond promised to look at the tax treatment of diesel vehicles, saying he will announce any changes in the autumn budget later this year.

‘Diesel is wounded, not dead’

“Uncertainty is the enemy of us all,” said Andy Eastlake, managing director of the Low Carbon Vehicle Partnership (LowCVP).

However, he said that one thing fleets can be sure of is that all of the major political parties share the common goal of every new car and van having zero emissions by 2040.

“They all had measures written into their manifestos to support the ultra-low emission vehicle industry,” he said. “They all identify air quality as one of the most pressing challenges for transport. 

“It’s the perfect storm for ULEVs, but diesel is wounded, it’s not dead.”

Fleet decision-makers largely agree that it is far too soon to sound the death knell for diesel, but fleet make-ups are changing and will continue to change. 

Respondents to ExpertEye’s fleet industry review said they expected to see a reduction
in diesel vehicles over the next two years, with electric, electric range-extended and hybrid engines gaining in popularity (fleetnews.co.uk, April 24). A significant number also said that petrol would make a comeback.

Meanwhile, more than half (52%) of respondents to a Fleet News poll said they expected petrol powertrains and AFVs, including plug-ins and hybrids, to account for the lion’s share of fleet registrations by 2021 (Fleet News, Sept 8, 2016). 

This rose to four out of five (81%) by 2026, while just 7% said diesel’s dominance would endure for the next 25 years.

Nick Molden, founder and CEO of Emissions Analytics, said: “We moved from a world where diesel was being pushed as a solution to our CO2 problems to it being the source of all evil.”

He told the debate he didn’t see pure EVs as a viable fleet alternative right now. “I think it’s very much a battle between diesel and the petrol hybrid for the future shape of the market,” he said.

“ hybrids have now got to a fuel economy level that is competitive with diesel, even in motorway driving.”

With diesel’s CO2 advantage under threat, it therefore makes it all the more important that it can be extremely clean in terms of NOx tailpipe emissions.

The cleanest 5% of diesel cars tested by Emissions Analytics are as clean as the average petrol car, according to Molden. “That shows diesels can be clean,” he said. “The problem is no one knows which is which? 

“If you go out and source one of the worst in the market – 18 to 20 times the legal limit – you’ll be contributing significantly to urban air quality programmes.”

Molden fears a more “draconian” approach from local and central government towards diesel if they fail to see a way of cleaning up the fleet.

“Ideally, what you would have is a more targeted approach to get the dirty ones out of the market as quickly as possible, focus on the clean ones and then you would have a much more rapid solution to the problem,” he said.

But, most importantly, he stressed: “Nobody needs to invent anything. It’s not a technological problem; it’s about getting that technology on to the cars.”

Fleets can drive change

Eastlake believes the industry needs to start talking about ‘clean’ and ‘dirty’ vehicles. 

“Diesel per se is not dirty,” he stressed. “It is the implementation of the after-treatment on diesel vehicles that has not been successful and has not delivered what we want. 

“The technology exists; it is possible and it is proven in the heavy duty market.”

Fleets can be the real driver of change, however, and taking the opportunity to engage with company car and van drivers is a vital first step.

“The driver is the biggest influencer on
emissions, the fuel economy and an EV’s range,” said Eastlake, “because whatever we do with technology, if we put it in the hand of a numpty who drives irresponsibly, the emissions and the fuel economy just go out the window.”

Karl Anders, national EV and public sector manager at Nissan Corporate, stressed fleets need to pick fuels which are fit for purpose.

“Instead of saying I’ve got an all-diesel policy, I’ve got an all-petrol policy or I’ve got an all-EV policy, I think fleets need to look at the individual,” explained Anders. 

“You’ve got to drill down to the individual requirements you will have for each individual vehicle. For a 100-vehicle fleet that might mean 30 diesels, 40 petrols and 30 EVs. We need to move away from a blanket policy on fleet.”

Eastlake agreed. “Choose the right vehicle for the right job,” he said. “But, diesel is not dead, it’s still probably the best choice for long distance, high mileage drivers.”