Changing fuel policies create an uncertain market

Posted by Meg Bernazzani on June 11, 2019

The Government has been vague about its future plans for diesel, petrol and electric car taxation and changed direction a number of times. For example, the plug-in car grant is evidence enough that authorities want us to drive cleaner vehicles, but it was downgraded by the Office for Low Emission Vehicles in November 2018, so the allowance is now lower and applies to a smaller number of cars.

Equally, the Government has yet to make any announcements about its plans for company car tax beyond April 2021, leaving companies and business drivers in the dark, while continued bad publicity around diesel has caused speculation as to whether or not it will be subject to further tax. Put simply, we just don’t know, and the ambiguity is also affecting the used car market.

More than half of dealers are reducing their diesel mix

When we spoke to dealers as part of the research for our One Voice Report, 69.9% told us that the lack of clarity around future fuel policy was having a negative effect on the second-hand car market, and 57.3% said they had either increased their petrol stock or decreased the number of diesel vehicles they offered.

Despite the Government’s lack of clear direction on the issue, 7% of retailers said they added more hybrids and electric vehicles to their stock mix, while 3.9% had upped the number of cars with smaller-engines on their forecourts. Factor in those numbers and a total of 68.2% of respondents had adjusted their stocking policies with regards to fuel type.

Hurdles remain for electric used cars

Retailers told us that second-hand electric vehicles are selling, but the process is not as straightforward as it is with conventional petrol and diesel models.

“We are selling a lot of electric cars. It is just the salespeople are finding it a bit of a struggle to have that level of conversation,” said Nathan Quayle of Fords of Winsford.

“Usually, the customer who comes in for an electric vehicle has done their homework. They are usually the early adopter. Our salespeople find it a challenge discussing things such as range, battery life and how you charge them. It is a big training piece that we are currently addressing.”

Training is a pertinent issue when it comes to used electric car sales and many dealers are already operating or developing their own schemes.

“We have had three- or four-day workshops delivered by our manufacturer partners at each site so that the salespeople and the service advisors can all talk with a bit more intellect about electric and combat the consumer anxiety,” said Ian Godbold, head of marketing at Cambria.

“A lot of the time the consumers come in and they are quite well-researched, but they are still quite unsure. The second you go, ‘Ah well…’, you have lost all credibility. It is quite a big training piece that our manufacturer has carried out. It is starting to pay off, but it is only ever as good as your sales force.”

Dealers call for government clarity

As with many other industries, used car retailers are desperate for clarity from the Government about its future policy on taxing and promoting particular fuel types. Every single dealer who answered ‘yes’ to the question ‘Is the Government policy on diesel and alternative fuels negatively impacting used car sales?’ in our One Voice Report also included a written answer to provide more detail about how they had changed their stock mix as a result of the issue. However, none of the respondents who answered ‘no’ gave us any further information.

One dealer summed up the problems surrounding the current approach to fuel policy and wider issues: “The Government needs to get behind the industry and clarify the truth surrounding diesel emissions. Until that happens, and Brexit is dealt with, the next 18 months will be extremely challenging.”

Topics: CarGurus data, industry news, trends