Diesel fuel is something of a paradox. Although it emits around 16% more CO2 than petrol, it also uses less fuel and more air to achieve the same performance, meaning that overall emissions tend to be lower.
As a result, diesel was once adopted by individual motorists and fleet operators as a ‘greener’ choice. And for many, the additional fuel efficiency achieved on longer motorway journeys meant that the environmentally friendly choice turned out to be fiscal friendly as well. However, this once favoured fuel has had a tough time since then.
Arguably, this all started when manufacturers were found to be artificially lowering the emissions produced during tests. More recently, an increased focus on the toxic non-CO2 emissions such as nitrogen dioxide (NO2) and sooty particulates, rising VED rates and the growth of Clean Air Zones (CAZ) and Ultra Low Emission Zones (ULEZ) have all combined to make the future of diesel far from sure.
So with petrol and hybrid cars getting more fuel efficient, and electric vehicles (EVs) becoming increasingly practical as both their range and the UK’s charging infrastructure increase, is it time to think about ditching your diesel?
Will diesels be banned?
The UK Air Quality Plan published in 2017 announced that the sale of new diesel and petrol cars will be banned in the UK from 2040 (although sales of hybrid cars will continue.) However, diesel cars already on the road are unlikely to be banned any time soon, especially when there are about 12.4 million of them.
What about Ultra Low and Clean Air Zones?
London’s new ULEZ charges £12.50 a day, 24 hours a day, 365 days a year, for all non-Euro 6 diesel cars and vans. Currently, it covers the same central London area as the Congestion Charge (which you must also pay) and, from October 2021, it will be expanded to the North and South Circular roads.
Leeds and Birmingham are introducing similar schemes in 2020 and most other major UK cities are planning to follow their lead. Some, like Birmingham, are charging non-Euro 6 diesel cars and vans £8 per day, whilst cities such as Leeds are concentrating their efforts on heavier vehicles.
It’s also interesting to see that Oxford has gone even further and proposed a Zero Emission Zone (ZEZ) where non-zero emission taxis, cars and vans will be banned from certain roads by 2020, and all non-zero emission vehicles across the city centre by 2035.
What about parking surcharges?
If you live in or visit the London boroughs of Westminster and Islington you now have to pay a parking surcharge for diesel. Westminster imposes a 50% surcharge on pre-Euro 6 diesels only – but Islington has gone for a blanket £2 surcharge on all diesels (and £100 a year for parking permits). Other councils may well follow their example and so it is a trend that’s likely to continue.
What about depreciation?
Diesel sales have fallen and so have their residual values, albeit slowly so far. In general, they are depreciating slightly faster than petrol cars, but larger diesels are retaining their value better because of their greater pulling power and fuel economy.
How is Vehicle Excise Duty (VED) affected?
A new system of VED was introduced in 2017, charging petrol and diesel cars according to their CO2 emissions in the first year. The Government then tweaked this system so that, from 1 April 2018, new diesel cars are pushed up a band, meaning that they pay a higher first-year rate than their petrol counterparts. For example, in 2018-19, the first-year rate for a petrol car that emits 76-90g CO2/km was £105, whereas it was £125 for an equivalent diesel.
The cleanest new diesels (those meeting the Real Driving Emissions Step 2 (RDE2) standards) were made exempt from this change, meaning that they face the same first-year rates at petrol cars. However, the Government has also introduced a 4-percentage-point Company Car Tax (CCT) surcharge for diesels.
Is the new MOT bad news for diesel drivers?
MOT changes introduced on 20 May last year mandate stricter checks on diesels fitted with a Diesel Particulate Filter (DPF). If there is smoke coming from the exhaust, or any evidence that the DPF has been tampered with, the vehicle will fail its MOT. If this leads to replacing the DPF, it is likely to cost upwards of £1,000.
What about company diesels?
In April 2018 the Benefit in Kind (BIK) diesel supplement was raised from 3% to 4% for diesel-only cars that fail to meet the new Real Driving Emissions 2 (RDE2) standard, up to the 37% maximum.
For drivers of company diesels, this means looking at whether you’re clocking up enough miles each year for fuel savings to cover the additional tax.
As a business owner or fleet manager, you need to be aware that from April 2020 both VED and Company Car Tax (CCT) will be based on a new, stricter (WLTP) test and it is therefore likely that official CO2 emissions figures for new cars will rise and fuel economy will fall. In fact, some experts have predicted increases in emissions of 13-22%. As a result, this may well mean paying more National Insurance and VED in future.
The new stricter testing regime also seems likely to increase costs for maintaining diesels, which are already higher than petrol, as manufacturers are reportedly reducing the service intervals on new WLTP-approved diesel models, further squeezing the viability of diesel fleets.
It’s not all bad news
It’s worth pointing out that diesels are still the most fuel-efficient option for higher mileage drivers (i.e. those who cover over 20,000 miles a year) and they still have longer lifespans than petrol vehicles, producing about 20% less CO2 than petrol. In fact, the new Euro 6 diesels are a lot cleaner than Euro 5 ones – though their particulate filters can clog up if only used for urban driving. In straight financial terms, although the landscape is changing, they also tend to cost a bit less than full hybrids or electric vehicles.
The final verdict
Despite the ‘Dieselgeddon’ headlines, the decision about whether to ditch diesel, and when, should be based on driving patterns, emission levels and the impact of likely future restrictions.
For example, owners of pre-Euro 6 diesel who live in or visit major UK cities will tend to find that the cost of ownership and driving will continue to rise. Having said this, ‘ditching diesel’ may in some cases mean simply upgrading to Euro 6 diesel, which is significantly cleaner and not currently subject to ULEZ/CAZ charging.
Equally, the non-financial benefits of moving to hybrid or fully electric vehicles wherever possible prepares us all for a cleaner, greener, healthier future.
Whether you are considering a change on your personal car, business car or are a fleet manager considering the best options for your fleet, get in touch today and speak to our experts to discuss the best option for you.