Sales of diesel cars continue to slump in EU

4 May 2018 |

Sales of new cars in the EU in the first quarter showed a further decline in market share of diesel cars in favour of petrol, a trend that suggests demand for biodiesel will likely be lower than had been estimated at the time when many producers added new capacity.

In the first quarter of 2018, 37.9% of all new passenger cars in the EU ran on diesel, compared with 46% in the January-March 2017 period, the European Automobile Manufacturers' Association said this week.

It added that petrol cars accounted for 55.5% of the market, up from a 48.8% share in the corresponding period in 2017.

Alternatively‐powered vehicles accounted for 6.5% of EU car sales in Q1 2018, up from a 5.2% share in Q1 2017.

The trade association added that in the first quarter, EU demand for alternatively‐powered vehicles grew by 26.9%, while registrations of battery electric (+34.3%) and plug‐in hybrid electric cars (+60.2%) accounted for the strongest growth.

It added that during the same period, 139,556 hybrid electric vehicles were sold in the EU, 25.7% more than in Q1 2017.  It added that the market for NGV, LPG and E85 cars also rose, with demand increasing by 12%.

On an annual basis, new car sales account for around 5% of the EU’s accumulated pool of vehicles, based on AMEA data.

This means the sharp decline in sales of diesel cars may take time to translate to big changes in demand for the biodiesel market, where supply is the main issue for producers.

Many of these producers built new capacity or expanded it in late 2000s and early 2010s based on expectations of a 50%+ market share for new diesel cars and increased demand for biofuels to comply with 2011-2020 EU Renewable Energy Directive.     

The influx of around 800,000 mt of cheap Argentinian biodiesel, following the lowering of tariffs in the second half of 2017 and their removal this year, has put downward pressure on prices and prompted some EU-based biodiesel producers to mothball capacity. 

Indonesia is also expected to export around 430,000 mt of cheap biodiesel to the EU this year following the bloc's removal of antidumping tariffs in the wake of a WTO ruling. 

Sales of new diesel cars have plummeted in Europe since the end of 2015, when US authorities accused Volkswagen of rigging emissions tests, stoking fears about the role of diesel engines in urban pollution and prompting consumer concerns about resale values of diesel cars. 

By way of contrast to the private motoring sector, the EU's road freight industry remains overwhelmingly reliant on diesel engines.

The European Commission will later this month issue a communication on how to reduce energy consumption in heavy goods vehicles and promote a switch to cleaner technologies.

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