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Diesel car boom about to bust

Change is inevitable. And in the motoring world that inevitability is the move away from fossil-fuelled cars to sustainable and eco-friendly vehicles.

That said, the current emissions saga could bring about the early demise of the diesel engine in the passenger-vehicle market.

The diesel engine is the powertrain of choice for an increasing number of passenger vehicle owners; in Western Europe alone, diesel models account for 52% of the market.

Cost-conscious consumers opting for diesel vehicles do so not only for the superior fuel efficiency that these vehicles provide, but also for their renowned robustness, added torque at low revs, enhanced cruising performance and reduced emissions.

Locally there’s an extra bonus – a lower fuel cost.  

Diesel vehicles currently make up around 35% of new vehicle sales in South Africa, 18% of them passenger vehicles.  

But as a natural consequence of diesel emission cheating abroad, consumers may begin to look at alternatives.

“People may question diesel technology but the reality is the engine is a good one; it is extremely efficient and the technology well-proven,” says Tim Abbott, managing director of BMW Group South Africa.

“The biggest risk is if people start perceiving the diesel engine as bad. This will affect numerous vehicles and the cost of motoring will go up as a consequence. And that is bad for everyone.” 

Countries and cities around the globe are under pressure to tackle pollution. And in many European countries like France and Norway, anti-diesel measures are putting added pressure on the maligned engine.

For carmakers like Volvo and BMW, whose reliance on diesel model sales in Europe is high, at 87% and 81% respectively according to Statista.com, this can’t be good news.

Locally, Volvo attributes 57% of its 2015 year-to-date sales to its diesel variants, against BMW’s 36%.

Other manufacturers like Toyota are less diesel-dependent.

With the exception of a number of SUVs or bakkies (often by nature diesels), the Corolla 1.4 diesel is Toyota’s only passenger diesel vehicle on sale in SA. 

“The reality is that the diesel engine can’t go away. It is core to our business, core to everybody’s lifestyle,” Abbott tells finweek.

“We have not seen a change in consumer behaviour at dealership level. The efficiency of the engine is so good it is unlikely to stop people from buying a diesel vehicle.” 

Says Nicholas Nkosi, head of Standard Bank Vehicle and Asset Finance, Retail Banking: “Maybe it is too early to tell, but certainly there is nothing in our numbers to suggest that people are changing their minds about buying a diesel vehicle.”

Nonetheless there are misperceptions and myths around emissions of the diesel vehicle and Abbott believes that industry – possibly through the National Association of Automobile Manufacturers of South Africa (Naamsa) as an independent body – has a part to play in overcoming this.

But if diesel vehicles are to overcome the emissions backlash, emissions testing will probably have to reflect real-life road conditions rather than the controlled environment of a laboratory.

Inevitably though, given sustainability goals and the drive for less dependence on the fossil-fuelled car as the bulk provider of sales, car manufacturers are likely to shift focus from conventionally fuelled vehicles and accelerate their hybrid and electric programmes.  

This is an excerpt from an article that originally appeared in the 19 November 2015 edition of finweek. Buy and download the magazine here

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