Diesel sales to face global crash within 10 years

December 13, 2016

Diesel is set to ‘almost disappear’ across the global car market within the next 10 years as it suffers a ‘perfect storm’, according to a UBS report. 

Diesel will have to fight on two fronts. It will lose its competitive advantage on price as the cost of electric and hybrid vehicles continues to fall, and it will be crippled by brutal emissions regulations and increasingly poor public opinion of the fuel post-Dieselgate. 

This will see its global share of car sales severely squeezed from 13.5% to just 4% by 2025, UBS says. 

Diesel will be hit hardest in its traditional heartland of Europe, where sales will collapse from 50% to just 10%. 

While sales in Europe have been in slow decline since 2012, the pace has accelerated over the past 12 months following the Volkswagen diesel emissions scandal. 

Were the UBS forecast to come to pass, it would send shockwaves through the automotive industry, with the decline outlined by UBS being much sharper than many in the industry are currently predicting. 

The report comes as many of the major manufacturers have begun to question whether diesel cars will have any viable place in the future. 

Meeting CO2 targets – once another mainstay of diesel's competitive position – has now faded away too, with every manufacturer now having a major electrification strategy of some description in order to meet ever-tightening CO2 targets. Carmakers can no longer rely on diesel to meet CO2 emissions targets, since diesel cars have come under attack from regulators for the nitrogen oxide emissions that are emitted in large quantities by diesel engines. 

The report predicts that diesel cars will be replaced with 48V mild-hybrid technology, which pairs a small petrol engine with a large battery, offering similar fuel economy and performance to diesel, while crucially extinguishing the NOx emissions. 

Most strikingly, UBS predicts sales of 48V cars will overtake diesel sales globally in only four years’ time in 2021. These vehicles will account for a quarter of all cars sold globally by 2025. 

Another perk that diesel enjoyed in Europe – where diesel sales peaked in 2012 – is also set to be eradicated, with France and Belgium pledging to reduce diesel’s tax advantage over petrol, with the fuel being taxed by around 0.15 less than diesel per litre. 

Even further, major European cities including London, Paris, Madrid and Athens all have plans to ban diesel vehicles from their central areas, with pressure groups such as the UK’s Doctors Against Diesel, driving the debate. 

The fatalist UBS report concluded: ‘In the aftermath of the Volkswagen diesel issue, politicians and regulators have become highly sensitive and increasingly populist about diesel emissions.’ 

It added: ‘Even if some plans appear overly ambitious, the direction of travel is obvious and likely irreversible.’ 

The one ray of light it offered was for trucks and large SUVs, where diesel will remain the dominant fuel.

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