The boost to the European car market this year provided by government scrappage incentives has significantly depressed the diesel sector as car buyers have shifted to smaller gasoline engined cars.
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Analysts at JD Power Automotive Forecasting estimate that some 2m diesel car sales cumulatively have been lost in Europe since the beginning of 2007.
Analyst Al Bedwell says that twin effects of weak car markets and scrappage incentives are responsible.
“In the German car market, for example, the diesel share has fallen by around 20%. In the middle of this year the German diesel share hit a low point of just 27%. It has picked up a little since then as the market returns to a more normal segmentation profile.”
Suppliers to the diesel sector can take some reassurance that we are close to the bottom of the decline in share, though volumes will stay weak on JD Power’s projections for European car demand next year.
“We’re at the diesel share trough now. As scrappage schemes end, diesel share will recover,” Bedwell says.
But diesel faces another squeeze, he says.
“Diesel share won’t recover to the peaks that we have seen in the past because we are starting to see the impact of more fuel efficient gasoline engines, especially in small cars.”
According to JD Power, the diesel share of the West European car market peaked at 53% in 2007; this year it is likely to be around 45%.
“Diesel is still essential to hit long-term EU CO2 reduction targets and so it will still account for 40% of new car sales in ten years’ time,” he says.
And the global picture?
“Decline in the European diesel volume will be compensated by growth in diesel demand in other regions of the world, according to the 2009 JD Power Global Light Vehicle Diesel Study,” Bedwell maintains.
Dave Leggett
