27 May 2008

Consumer Confusion Over Diesel Cars

Diesel car sales may have rocketed in 2007 but Australia is still way behind European countries in terms of diesel market share.

The figures speak for themselves; the diesel market share in Australia in 2007 was around 16% while Europe saw 53%. Greenfleet CEO, Sara Gipton suggests that there are two main reasons for the size of the gap; the current FBT system and continuing consumer confusion over the relative benefits of petrol and diesel vehicles.

"The current FBT system does nothing to promote the adoption of fuel efficient vehicles or behaviour; in fact it rewards individuals for driving as many kilometers as possible. This has significant implications in terms of the environment, pressure on infrastructure and driver safety."

"The 2008-2009 Federal Budget has done nothing to alter this position."

"The equivalent tax in countries like the UK (Benefit in Kind Taxation) is not based on kilometres travelled but on the CO₂ output of the vehicle chosen. The more efficient the vehicle, the less the individual pays in tax, that's why so many choose the diesel option."

Ms Gipton added, "The UK tax regime isn't perfect but it does encourage informed decision-making when it comes to new vehicle purchases."

Ms Gipton believes that while tax legislation is one way to influence buyer behavior the other is to ensure that drivers are better informed about the choices available to them.

"There are several factors for buyers to consider when deciding between petrol and diesel, neither is right for everyone, but it's important to understand how each of these could affect your ownership experience."

Factors to consider include:

• Power versus Torque. While some petrol engines deliver more kilowatts than their diesel equivalents, look for the torque figure (usually in Newton metres (Nm)) to better understand how the vehicle will perform in everyday driving conditions.
• Lifetime costs.  Diesel is currently around 20 cents per litre more expensive than standard unleaded petrol (ULP) but many new vehicles (especially European models) require premium unleaded to run efficiently. Combine this with the fuel efficiency to see which will cost you more each year at the pump.
  Other things to consider are the purchase price, resale value and servicing costs that petrol and diesel vehicles achieve respectively.
• Emissions. It's well known that diesel cars produce far less of the greenhouse gas CO₂, largely due to their greater fuel efficiency. There is a lot of information around trying to discredit diesel fuelled cars based on the particulate matter and oxides of nitrogen (NOx) in diesel exhaust, however new generation diesel fuelled passenger cars are actually good performers in this area.
  Many European diesel cars, including all Peugeot, Citroen, Volvo and Alfa Romeos, meet stringent European standards for both particulates and NOx. Australian diesel fuel emission standards are a little behind Europe and the US, but the majority of new diesel fuelled cars sold in our market are not.

Our suggestion - don't fall for the hype, do a little research yourself and find out which Euro standard your desired diesel fuelled car meets (Euro IV is the current standard, Euro V is more stringent and comes into effect in 2009, Euro VI will be more stringent again due in 2014).

Diesel vs Petrol? (98KB)